of public finances. but that is not the complete story. in many countries, public finances were already stretched even before the crisis. this surely says something about the state of financial governance in the public sector of these economies. in the advanced economies, ageing populations and over - generous health and pension benefits were a major source of strained fiscal positions. although the threat of demographics to fiscal sustainability is at this juncture most imminent for countries such as japan, spain, italy and greece, where the old age populations are rising most sharply amid already high levels of debt, it is only a matter of time before many emerging market economies will also face similar issues. that includes countries in asean. it is therefore imperative that the public financial governance adequately embed such longerterm considerations into financial decisions being made today. in many emerging market economies that have endowments of resources, the state of financial governance is also reflected in how governments managed the riches that flow from these resource endowments, especially in terms of providing for future generations and saving for bad times. sadly, there are too many examples of countries that have badly managed their resource wealth. not only have they failed to save for the future, even their use of the resource wealth has contributed minimally to supporting sustainable economic growth, often because much of that wealth is pillaged by those responsible for its management. the practise of good public financial governance is evidenced not just from the pattern of spending but also from the effectiveness of implementation and the achievement of outcomes. for example, education and talent development is a key priority in many countries, emerging as well as developed. large amounts of public funds are devoted to education. on the surface, it may look like good financial governance to spend so much money on such a socially and economically desirable objective. yet, much of that spending goes to waste if there are no accompanying measures to bring about other complementary changes such as raising standards and professionalism, addressing incentives, and ensuring that what is taught meets the needs of the economy. high spending of public funds and the persistence of mediocrity will go hand - in - hand if no one is likely to be held accountable for failure to achieve outcomes. therefore, good financial governance must be measured in the achievement of specific and measurable outcomes. if the outcomes fall short, then tax - payer money cannot be considered to have been well spent. when there is a lack of financial governance in the public sector, it means that government contracts are awarded based on who you know

is especially pertinent in the current environment of prolonged low interest rates. sound financial decisions are needed to ensure that households do not live beyond their means and accumulate excessive debt. this is essential to ensure the sustainable growth in consumption, rather than having debt - fuelled consumption binges followed by prolonged slumps. it is these types of considerations that have made bank negara malaysia maintain a level of interest rates that we believe balances between supporting the economy and discouraging excessive risk taking. this has been supplemented with other policy tools, including macroprudential policies, to manage risks within the financial system and economy. therefore, it is not only national governments themselves that must practice sound financial governance, they must also promote it as a key priority within the society and not create incentives that lead to unsustainable financial behaviour among economic agents. turning now to the corporate sector, at the surface, corporate financial governance appears to have ample checks and balances. management is accountable to boards and boards are accountable to shareholders. for publicly listed companies, there is the market discipline of the share price taking a beating for any perceived shortfalls in financial governance. unfortunately, history is replete with incidences of the failure of such checks and balances, including the repeated failure of markets to impose financial discipline on corporations. notable examples of the failure of corporate financial governance include the carrian group in 1983, enron in 2001, worldcom in 2002, and the numerous examples from the recent financial crisis. the narrow fixation on profit maximisation has, in many cases, led to the source : https : / / www. regjeringen. no / en / topics / the - economy / the - government - pension - fund / market - value - of - thegovernment - pension - f / id699635 /. source : https : / / www. mti. gov. sg / aboutmti / documents / app. mti. gov. sg / data / pages / 507 / doc / erc _ comm _ mainreport _ part2 _ v2. pdf, page 77. bis central bankers ’ speeches misallocation of resources, including the channelling of funds towards unproductive activities for purposes of rent extraction and speculation. this harms economic growth as productive segments are under - invested in. the functioning of markets also needs to be improved. given the widespread abuse and attempts at manipulation, i believe that appropriate regulations, and their