, aiming to strengthen the quality and quantity of capital requirements for banks. basel iii will take effect in january 2013, and a more stringent liquidity coverage ratio and leverage ratio will be put in place. besides, the fsb has requested additional capital requirements and more stringent regulatory oversight on global systemically important banks. to address moral hazard in banks which are considered “ too big to fail ”, they are required to establish a so - called “ living will ” and recovery and resolution plan. i do not intend to go into details about these measures. but i would like to point out that from now on banks will require more capital and more liquid assets for their financial intermediation activities, and that this is going to reduce their credit - creating ability. bis central bankers ’ speeches this will inevitably drive up the cost of borrowing for individuals, companies and governments alike, thereby adding impetus to the process of deleveraging and debt reduction in the major industrialised countries. government : it is now apparent that many major industrialised countries have over - borrowed. the problem has been exacerbated by the global financial crisis in 2008. following a prolonged period of incubation by market failure, the european debt crisis was finally precipitated by ireland and greece. the crisis has since remained unresolved, and has even spread to core countries like spain and italy. other countries of the european union, including the uk and france, are faring not much better, though the markets have been more accommodative of their plight so far. the whole europe is in fact mired in the “ debt abyss ”. for all the hard efforts by the european central bank ( ecb ) to minimise the risk of a total euro collapse, president of the ecb, mr mario draghi, once said that these were merely attempts to buy time, so that the euro zone countries could implement fiscal and structural reforms. hopefully the markets would be convinced that these reforms would help those countries reduce government debt and regain competitiveness. as regards fiscal reforms, the eu agreed on and signed the fiscal compact in march 2012. if implemented, the european countries concerned will have to pursue rigorous deficit reduction plans and lower their total sovereign debt to gdp ratio to 60 % or below within years. take italy as an example. it will have to keep on reducing its government debt by an amount equal to 3 % of gdp annually for the next twenty years so as to reduce its current debt - to - gdp

banks in the society. i think you will agree with me that in the interest of good governance, a board of directors has to provide the needed steer, guidance and checks and balance to the bank. clearly this can only be achieved if the ineds can function effectively and efficiently. without functioning ineds, the board is just another gathering of the senior bank management. we may as well abolish the board of directors as it would serve no real or useful purposes. 6. this is why the hkma has in the last few years been embarking on a programme to help equip and empower the ineds. our intention is to help ineds to work with the executive directors and senior management to achieve a more optimal outcome and not work against them. so it is important that the bank management joins the hkma in embracing the empowerment of ineds because we all share the common interests and goals. 7. under this ined empowerment programme, we have rolled out a number of initiatives. some of you have attended the high level seminar co - organised by the hkma and china banking regulatory commission ( cbrc ), which was designed to give ineds a unique opportunity to understand the macro perspectives of china ’ s development strategy and how hong kong should position itself in the years to come. the first one was held in beijing in october 2015 and the second one was held in xian in june last year. on both occasions, 1 / 2 bis central bankers'speeches the former chairman of cbrc personally attended to speak to the ineds, which is a clear indication of the support given by beijing on this programme. on a regular basis, we have also organised thematic seminars in hong kong, all of which were well attended by ineds. in december last year, we issued guidance to banks on the hkma ’ s requirements to enhance the roles of ineds, including their remuneration and the way the boards should conduct their meetings. two weeks ago, the hkma issued a circular to banks providing guidance on the importance of sound governance and good corporate culture and what they should do to promote them. i won ’ t go into the details now as the main themes of these new guidance circulars will be covered in the conference later today. 8. today is going to be a long day for you because the conference won ’ t end until 5 : 45 pm. however, i sincerely hope that by the end of the conference there