mugur isarescu : enhancing the role of governance in international business address by mr mugur isarescu, governor of the national bank of romania, at the 37th eiba annual conference, palace of parliament, bucharest, 8 december 2011. * * * ladies and gentlemen, distinguished audience, it is an honour and, at the same time, a great pleasure to address the 37th edition of the annual conference of the european academy of international business. allow me to join the organisers in addressing all participants a warm welcome. i am delighted that bucharest is hosting today such a momentous event attended by so many guests from among world - famous professionals. i am also glad to welcome you this evening to the reception offered by the national bank of romania. throughout its 131 years of existence, the nbr, established in 1880 as the 16th central bank in the world, has constantly supported and developed strong ties with the academic community, hosting numerous conferences, encouraging debates and building partnerships aimed at enhancing financial education. in this context, we are happy to contribute these days to the annual gathering of your organisation. today ’ s theme – governance – is quite a vast topic, and was clearly brought to the spotlight by the recent global economic and financial crisis. when talking about governance, one cannot ignore the times we live and the major economic and financial uncertainties we all are grappling with. therefore, it is essential to look at trends and changes in the governance in the light of the lessons to be learned from the global financial crisis. it would be an unpardonable mistake by exiting the crisis without learning all its lessons. governance can generally be seen as the manner of exercising power in a country ’ s economic and social resource management to ensure its development. it should also apply to the regional and global context. we all know that good governance means drafting appropriate policies, programmes and regulations that must thereafter be transposed into legislation. the role of the governments, that is of politicians, is obvious here, and institutions play a major part in a country ’ s governance, as the american nobel laureate douglas north noted. i cannot help emphasising this, the more so as our host today is a citadel of legislative power. there are many aspects one can approach when talking about governance. i would like to say a few words about three levels : macrogovernance, corporate governance and also one of the key themes of these days – governance in the european union. let me begin with macroeconomic governance which is closer

. the royal instructions to the governor of hong kong and the basic law, illustrates that hong kong ’ s monetary autonomy has not and will not be eroded. in fact, hong kong has enjoyed an even higher degree of monetary autonomy after the transfer of sovereignty. 3. under the royal instructions, the governor could not assent to “ any bill affecting the currency of the colony or relating to the issue of bank notes ”, or “ any bill establishing any banking association, or amending or altering the constitution, powers, or privileges of any banking association ” without previously obtained the approval of the secretary of state. under the basic law, however, there appears only a corresponding general requirement. article 76 states that once a bill has been passed by the legislative council, all that is required for it to take effect is signing and promulgation by the chief executive. in addition, article 17 states that “ laws enacted by the legislature of the hong kong special administrative region must be reported to the standing committee of the national people ’ s congress for the record. ” but this article also states that “ the reporting for record shall not affect the entry into force of such laws. ” 4. on the other hand, unlike the royal instructions, the basic law also prescribes in considerable detail the financial systems to be practised in the hksar. for example, article 109 provides that the hksar government shall maintain the status of hong kong as an international financial centre. article 110 provides that the hksar government shall, on its own, formulate monetary and financial policies. article 111 prescribes that the hong kong dollar, as the legal tender in the hksar, shall continue to circulate. article 112 states that no foreign exchange control policies shall be applied in the hksar and that the hong kong dollar shall be freely convertible. article 113 stipulates that the exchange fund of the hksar shall be managed and controlled by the government of the hksar. it is unusual to have such detailed specifications in a constitutional law, but the transfer of sovereignty is a significant change and it is helpful to retain those effective features that contribute to hong kong ’ s success as an international financial centre in the form of constitutional law. these provisions have, of course, provided adequate safeguards for hong kong ’ s monetary autonomy. the reliability, credibility and transparency of our monetary policies are also greatly enhanced. the efficiency of market operations, which may be required from time to time for achieving our monetary policy objectives, has also been improved