feedback received. i think it is a good outcome of the process that we were able to distil the points of contention down to a small number of issues. outside of these, the feedback reflected a widely held consensus. market participants have recognised the code ’ s aim of helping move the fx market to a better place. one of our central aims in drafting the code is for it to be principles - based rather than rulesbased. there are a number of reasons why this is so but, for me, an important reason is that the more prescriptive the code is, the easier it is to get around. rules are easier to arbitrage than principles. the more prescriptive and the more precise the code, the less people will think about what they are doing. if it ’ s principles - based and less prescriptive then market participants will have to think about whether their actions are consistent with the principles of the code. but we have not written a procedures manual. rather we have articulated principles that need to be taken into account. individual firms may then take these principles and reflect them in their own procedures manuals. our aim in setting out these principles is to provide market participants with the framework in which to think about how they, for example, handle stop - loss orders. the emphasis here is very much on the word ‘ think ’. the global code will not provide the answers to all your questions, but it should help you ask the right questions. adherence alongside drafting the code, we have devoted considerable time and effort to thinking about how to ensure widespread adoption of the code by market participants. clearly, that has been an issue with the various existing codes that had been in place in a number of markets. it is evident they were ignored on occasion in the past, wilfully or otherwise. we have worked with the industry to produce a principles - based code rather than a set of prescriptive regulatory standards. it will not impose legal or regulatory obligations on market participants, nor will it supplant existing regulatory standards or expectations. we have developed a blueprint for adherence that has been published alongside the code today and sets out the key elements we think will be required for the code to be successful – and the steps that have been taken, and will be taken, to ensure this is the case. 2 / 4 bis central bankers'speeches one critical dimension is market - based adherence mechanisms. an important element of discipline should come from the market itself. the adherence

ms. phillips focuses on four themes underlying sound international banking supervision remarks by ms. susan m. phillips, a member of the board of governors of the us federal reserve system, before the conference on coping with financial crisis in developing and transition countries : regulatory and supervisory challenges in a new era of global finance, forum on debt and development held at the netherlands bank in amsterdam on 17 / 3 / 98. it is a pleasure to be here to address this international conference of fellow banking supervisors and other distinguished international participants. conferences like this one are important forums for discussing current issues in international banking supervision among the supervisors, bankers, and other financial industry participants of many nations. such communication has become critical as the financial operations of the banks we supervise become more global, complex, fast paced, and interwoven. i would like to thank the forum on debt and development and other co - sponsors for organizing this conference, which i hope will help us build essential bridges among banking supervisors and open new channels of communication internationally at all levels. i would like to focus my remarks today on four fundamental themes underlying the 1997 basle supervisors committee ’ s core principles of effective banking supervision. as i discuss each theme, i will naturally draw on our experience in the united states, while making a few observations about the applicability to the current asian banking situation. • • • • the first theme is the need to focus supervisory efforts on the specific risk profile of individual institutions. my second theme is the need for sound accounting and disclosure systems to provide sufficient transparency to allow the financial markets and supervisory agencies to evaluate institutions ’ financial conditions. my third theme is the need for adequate capital and the challenges we face in keeping capital standards current. finally, we must recognize the need for international banking supervisors to work closely and cooperatively together to achieve effective coordinated supervision of global banks and other financial firms. i. risk - focused supervisory approach one of the goals of banking supervisors is to help identify and address weak banking practices early so that small or emerging problems can be addressed before they become large and costly. to do that in today ’ s global fast - paced markets, and in an environment in which technology and financial innovation can lead to rapid change, the federal reserve is pursuing a risk - focused supervisory approach. such supervision plays a critical role in helping us to achieve our responsibilities of : • • • working to ensure the safe and sound operation of the banking organizations that we supervise, promoting an efficient and effective financial system that finances economic growth, and