more critical examination of exchange rate policies, particularly in the light of accumulated foreign currency indebtedness, is needed. second is the imperative of efforts to strengthen financial systems. there is now a core body of principles on which to draw which reflects the accumulated experience of supervisors and regulators in a variety of countries. their implementation, both in industrial and emerging market economies, should be a matter of priority [UNK] both for domestic authorities and the international financial community. thirdly, there is a need to promote transparency to avoid excesses building up unnoticed. this will require improvements in accounting and disclosure practices and in international banking statistics, and an extension of data dissemination standards to cover domestic financial conditions. and, finally, as i noted at the end of my remarks, arrangements for crisis resolution need to involve burden sharing with the private sector to lessen moral hazard risk. it would clearly be presumptuous to assert that by addressing these and other issues to be identified in due course, we shall avoid crises in the future, or handle more smoothly those that do occur. it would be equally hazardous to expect that there are ready and easy answers in several of these areas. i am confident, however, that the asian economies struck by crisis will emerge strong and vigorous from the measures they are undertaking, and that the international community will be responsive to the lessons it has learnt from your experience. [UNK]

economies. lastly, and very importantly, they have been drawn up with the active involvement of supervisors from a wide range of countries, including most of the key emerging market economies, including some central banks represented here. let me now turn to some of the specific recommendations, and to ways in which bank supervision can work to strengthen bank soundness. one of the key foundations of the basle committee ’ s approach over the years has been the focus on risk - weighted capital adequacy. this remains as important as ever, but it is clear that the way in which the current standards are expressed has not prevented major episodes of instability. part of the problem lies in the fact that insufficient attention is given to the fact that the minimum capital requirements are just that : minima. what can be acceptable for a strong, well - managed, well - diversified institution in a major financial centre is likely to be inadequate for a bank operating in a more volatile environment, where credit and market risks are much greater. some supervisors in emerging markets have recognised this and have set higher minimum standards. singapore and argentina are good examples in this regard. i hope their initiative will be followed more generally. but it is not simply the formal capital ratio that needs to be considered. in very many countries banks fail despite the fact that they were in apparent compliance with minimum capital ratios shortly before their collapse. this points to deficiencies in accounting standards, which, quite simply, allow bad loans to be classified as good. bank supervisors will have to insist on much more rigorous standards of loan classification and bad debt provisioning. they will also have to insist on greater transparency in financial accounts, so that problems can be identified before they grow to life - threatening proportions. of course, at the root of balance sheet weaknesses are poor lending decisions. not all of these can be prevented by better banking supervision. improved information on borrower conditions is clearly a first step. a comparison by lenders of the return prospects of large local projects with return requirements prevailing internationally is another. other sources of excesses can certainly be tackled. some of these arise from what has come to be called “ insider ” or “ connected ” lending. a variant of this practice is the policy loans that are encouraged by political authorities who, for whatever reason, are unwilling to make direct budgetary provision for expenditures. the core principles make it clear that credit decisions by banks should be made purely on economic grounds. this means that credit officers in banks should have the training and the mandate