use the vast unused potential in people and produce “ leaders ” out of “ managers ” who can not only work hard but also motivate their co - workers for producing extraordinary results. the sector needs to recognize the transformation in the factors of production in the banking industry early and aim to effectively harness these new factors for its own betterment and, more importantly, in the bis central bankers ’ speeches interest of the society. by effectively utilizing these new factors of production, the sector could quickly bring in more and more financially excluded people under the ambit of the formal banking system and help it to be seen as a relevant and purpose - oriented sector. promoting financial literacy 23. in today ’ s digitized world, stating that information is power, is perhaps to state a truism. our economy is traversing towards being a knowledge economy. this is amply demonstrated by the contribution of services sector in our economy. however, much as we would hate admitting it, we are a financially illiterate society. and here, i am not talking about the common man alone. the financial illiteracy is all pervasive – the banks, the regulators, the policy makers – all suffer from some degree of financial illiteracy. let me quote a few examples to drive home my point. take the recent instances where banks had sold forex derivatives to their customers without proper understanding of their suitability and appropriateness. neither the customers nor the banks had an iota of understanding of the quagmire that they were getting into while entering into these contracts. the subsequent legal wrangling and losses suffered by some of the banks aptly demonstrate their financial illiteracy. take the case of the benchmark prime lending rate ( bplr ), which was, till recently, used by the banks for lending to their borrowers. my understanding of the bplr is that it is the rate at which the bank lends to its best borrowers i. e. those borrowers who are least likely to default on their loans. however, for years together, the banks continued to lend to their borrowers well below their bplr until the regulator introduced the base rate regime. another conundrum that needs to be solved is one surrounding the gold import. though many of us have realized its implications for the current account deficit, there have not been very sincere efforts to check its imports. we need to examine why public money should be utilized for importing gold by banks. i firmly believe that

highly complex, and the right calibration is very important. therefore, economic research plays a crucial role in ensuring the success of the initiated reforms. this is particularly true of the design of procyclical capital buffers and surcharges for systemically important financial institutions. but of course there are many other very interesting strands of research, some of which have been covered at this conference. quite a few papers aim, for example, to create a deeper understanding of systemic risk and contagion mechanisms, which are surely key issues when it comes to dealing with future crises. in their paper “ structural estimation of systemic risk : measuring contagion in the sub - prime crisis ”, rigobon and his co - authors have developed a measure of international contagion which allows us to assess the role of systemic risk for the global economy. 4. conclusion ladies and gentlemen addressing the broader context of global developments which have contributed to the financial crisis and in particular the role which global imbalances have played, you have dealt with an interesting but also very complex issue at this conference. this question is far from being resolved, and i am sure that it will occupy researchers for quite some time to come. that is not less the case for those strands of research that deal with how to strengthen the financial system. seen in this light, times have seldom been as exciting for economic research as they are right now. i would like to encourage you to continue with your work and wish you much success. thank you for your attention.