to let them forget the old ones. “ it is very likely that economic agents will try to hold onto their old habits when the effects of the crisis subdue. appeals on regulators will pile up for a more lenient implementation of rules, regulations, and policies. politicians will face pressure from their constituents to give priority to local concerns at the expense of global coordination. dominant academic paradigm may restrict those who radically incorporate lessons of these days into their studies. and of course, central banks, as always, will be criticized for spoiling the party at its hottest moment by taking away the punch bowl. we should be aware that keeping the old habits will only give us a new and may be more severe crisis in the near future. thanks to the global efforts, lessons derived from the crisis have already started to initiate dramatic changes in the global financial governance. there have been encouraging developments in recent months to design a new global financial system to prevent future crises. in the recent meeting of g - 20 finance ministers and central bank governors, member countries confirmed their commitments to the principles of strengthening transparency and accountability, enhancing sound regulation, promoting integrity in financial markets, and reinforcing international cooperation. i believe the establishment of financial stability board with increased participation of emerging countries is a critical step in achieving these objectives. in recent years, as a byproduct of market - oriented structural reforms and prudent macroeconomic policies, the share of emerging countries in world output and their role in global financial markets has significantly increased. now, we are faced with a more diversified group of countries with different objectives and interests. since the rise of emerging economies has dispersed economic power, decision - making process and international cooperation has become more complicated. for legitimacy and effectiveness of measures and also for better global governance, emerging economies should involve in decision - making process and be part of the solution. however, emerging countries should also be aware of the fact that more power in decisionmaking process comes with more responsibilities. both developed countries and emerging market countries share the blame in global economic imbalances that worsened the magnitude of current crisis. in theory, the adjustment of imbalances should have taken place through either exchange rates or interest rates or both. mainly developed countries prevented that adjustment on the interest rates, whereas emerging market countries joined their counterparts by preventing adjustment on the exchange rates. today, many people debate the need for a new global reserve currency, creation of an international clearing system, enhancing the role of central banks, and establishment of a su

mahesh kumar jain : some perspectives on banking supervision opening remarks by mr mahesh kumar jain, deputy governor of the reserve bank of india, at the 25th seacen - fsi conference of the directors of supervision of asia pacific economies, mumbai, 14 june 2023. * * * mr. mangal goswami, executive director, seacen centre, mr. raihan zamil, senior advisor, financial stability institute, directors of supervision of asia - pacific economies, ladies and gentlemen. a very good morning to all of you. the reserve bank is delighted to host this conference of directors of supervision. seacen research and training centre and fsi have curated an excellent line - up of topics that are both timely and pertinent, covering key banking risks in the asia - pacific region, lessons learnt from recent bank failures in the us and europe, and strategies for building resilience in banks. in the dynamic world of finance, it is imperative that we constantly adapt and learn from past experiences to navigate the challenges that lie ahead. this conference serves as a platform to exchange insights and foster collaboration towards a stronger and more resilient banking sector in the asia - pacific. 2. in the aftermath of the recent bank failures abroad, banking supervisors face the challenging task of finding a delicate balance between ensuring financial stability on the one hand and addressing the moral hazard implications of their actions on the other. by implementing prudent regulations, conducting effective risk - based supervision, promoting transparency, doing timely interventions, and maintaining independence and accountability, supervisors can strive to strike an optimum balance that fosters stability while minimizing moral hazard risks, ultimately contributing to a resilient and sustainable banking sector, which can support the real economy. 3. indeed, supervisors have come a long way from being mere regulatory compliance enforcers to becoming risk - assessors. new supervisory tools aim to instil a forwardlooking and calibrated supervisory approach based on principles of proportionality and risk perception. this approach involves constant focus on emerging risks and the business models at the supervised entities ( ses ). 4. today, i would like to share my perspective on some of the emerging issues, the indian experience, and a few areas that i believe are important for supervisors to focus upon. emerging issues 5. in the ever - evolving landscape of banking, several emerging challenges have surfaced, necessitating adequate attention and proactive measures. i would like to discuss three important issues.