vicious circle of forced selling, increased volatility, and higher haircuts and margin calls that was already well advanced at the time would likely have intensified. the broader economy could hardly have remained immune from such severe financial disruptions. largely because of these concerns, the federal reserve took actions that facilitated the purchase of bear stearns and the assumption of bear's financial obligations by jpmorgan chase & co. this experience has led me to believe that one of the best ways to protect the financial system against future systemic shocks, including the possible failure of a major counterparty, is by strengthening the financial infrastructure, including both the " hardware " and the " software " components. the federal reserve, in collaboration with the private sector and other regulators, is intensively engaged in such efforts. for example, since september 2005, the federal reserve bank of new york has been leading a joint public - private initiative to improve arrangements for clearing and settling trades in credit default swaps and other otc derivatives. these efforts include gaining commitments from private - sector participants to automate and standardize the clearing and settlement process, encouraging improved netting and cash settlement arrangements, and supporting the development of a central counterparty for credit default swaps. more generally, although customized derivatives contracts between sophisticated counterparties will continue to be appropriate in many situations, on the margin it appears that a migration of derivatives trading toward morestandardized instruments and the increased use of well - managed central counterparties, either linked to or independent of exchanges, could have a systemic benefit. the federal reserve and other authorities also are focusing on enhancing the resilience of the markets for triparty repurchase agreements ( repos ). in the triparty repo market, primary dealers and other large banks and broker - dealers obtain very large amounts of secured financing from money funds and other short - term, risk - averse investors. we are encouraging firms to improve their management of liquidity risk and to reduce over time their reliance on triparty repos for overnight financing of less - liquid forms of collateral. in the longer term, we need to ensure that there are robust contingency plans for managing, in an orderly manner, the default of a major participant. we should also explore possible means of reducing this market's dependence on large amounts of intraday credit from the banks that facilitate the settlement of triparty repos. the attainment of these objectives might be facilitated by the introduction of a central counterparty but may also be ac

to say “ small is beautiful ”. i have mentioned earlier that co - operative banks essentially engage in basic banking and they remain in that space. however, co - operative banks, particularly the bigger ones, like commercial banks, often get allured to high value loans and bulk deposits to achieve “ economies of scale ”. in a country like india, where there is a large chunk of unbanked population, the co - operative banks need to also keep serving the marginal participants as one of their primary objectives and should not be carried away in the race to grow big. governance and regulation of co - operative banks i find from the programme schedule that the conference started with deliberations on “ policy, laws, governance & enabling environment ”. reserve bank, as a regulator of banking sector is involved with the regulation and supervision of co - operative banks. i would, therefore, prefer to deal with governance and regulatory issues in a greater detail. corporate governance and principles of co - operation corporate governance relates to a system in which the interests of the whole gamut of stakeholders are recognized and conflicts among them are sought to be reconciled. the concept of corporate governance is not much different than the internationally accepted principles of co - operation. one of the cardinal principles of co - operation as accepted by international co - operative alliance ( iac ) is “ member economic participation ” indicating contributing equitably to, and controlling democratically, the capital of co - operative by the members. equitable appropriation of surplus is one such fine balancing act of reconciling conflicting interest of various stakeholders. unlike commercial entities, profit making is not the goal or end in itself for co - operatives, but it is just a means to achieve the noble objectives of equitable economic development of the society. if a shareholder of a co - operative bank is looking for higher and higher return on equity ( roe ) it may imply that although he is a shareholder of a co - operative institution, his behaviour is more of a shareholder of a commercial entity. on the other hand, if a shareholder of commercial entity has belief in corporate governance and corporate social responsibility ( csr ) he may technically be a shareholder of a commercial entity ; his behaviour would be more akin to a co - operator. what i intend to say is that the word “ co - operation ” is, perhaps, more of a state of mind than something structural and material. professionalism in governance structure there can hardly be a debate on the desirability of a