arbitrarily the activities of financial intermediaries, but rather to ensure that risks that are inherent in all economic activity are sensibly managed and that an adequate cushion of capital is maintained to cover unexpected losses. supervisors therefore have to understand the business of the institutions they supervise, and the opportunities and risks to which they are exposed. this change in focus is placing a premium on new skills within supervisory authorities : the tools of economists, consultants and business managers are taking their place alongside the more traditional disciplines of law and accounting. this has important implications for the recruitment policies of official bodies, to say nothing of compensation practices. good supervision means the need for top - class supervisors. and this is ultimately in the interests of the industry too. my second point has to do with the focus of the oversight activities of the prudential authorities. the job of a regulator should not be to prevent any and all business failures. to attempt to do so would mean that banks would have to conform to excessively costly prudential standards. business would then tend to slip away to unregulated channels of intermediation. the end result would be a distorted competitive structure and a riskier, not a safer, financial system. the task of supervisors, and in particular of central banks, is to ensure the stability of the financial system at large. by that, i mean the capacity of the system to continue to provide intermediary functions to the wider economy. if supervisory oversight were exclusively conducted institution by institution, it would miss some of the most common sources of systemic risk. widespread instability usually arises not from idiosyncratic problems but from shared exposure to common risk factors. the financial cycle is the most common. typically, the upswing of a financial cycle results in an acceleration of credit expansion and rising asset prices. the two feed on each other, since credit expansion causes asset prices to rise, and rising asset prices justify increased lending. eventually, however, something happens to prick the bubble and the process goes into reverse. as asset prices fall, bad loans are revealed. if adequate capital cushions have not been built up, failures occur, and can be system - wide in their incidence. stopping this cycle is not easy. but it is an essential part of the task public authorities now face to build a more robust financial architecture. we will certainly have to encourage financial firms to improve their risk management at an institution level. beyond this, however, thought is called for on how to moderate the credit cycle

her majesty queen maxima of the netherlands : financial inclusion and education – issues for central banks speech by her majesty queen maxima of the netherlands, united nations secretarygeneral ’ s special advocate for inclusive finance for development ( unsgsa ), at the all governors ’ meeting, bank for international settlements, basel, 9 november 2015. * * * thank you mr caruana and governor weidmann for inviting me to participate in this important gathering at the bank for international settlements ( bis ), and for your kind welcome. esteemed governors, ladies and gentlemen, i am pleased to be back at the bis and to speak about the opportunities and challenges of advancing financial inclusion with central bank leaders from around the world. i was last here in october of 2014 to participate in the third highly productive engagement with the financial standard - setting bodies around financial inclusion. their commitment to promoting financial inclusion has never been higher, and their many actions have been documented in a draft paper that will be presented to the upcoming g20 summit in antalya, turkey. this is the second white paper from the g20 ’ s global partnership for financial inclusion, for which i am pleased to serve as honorary patron. it has been produced in collaboration with the standard - setting bodies and it takes stock of the evolving financial inclusion landscape ; it documents their individual interests, activities and cooperation in the area of financial inclusion ; and sets out priorities for further work. what do i mean by the term “ financial inclusion ”? financial inclusion is about providing affordable, responsible and sustainable access – which ensures usage - to formally and professionally regulated and supervised financial services to those who are excluded. in the past few years it has become increasingly clear that providing individuals and small businesses with financial services has a powerful role in fostering equitable growth and furthering vital development goals such as poverty reduction, gender equality, and food security. this was clearly recognized by 193 un member states when they adopted the new 2030 sustainable development agenda in new york in september. we have also seen an increasing recognition of the positive connection between financial inclusion and financial stability. a world bank global financial development report background paper noted that financial inclusion can enhance stability through direct and indirect channels 1 ( 2014 ). more recent evidence outlined in an imf staff note – which i have asked to be shared with you today – shows that greater financial inclusion contributes to financial stability in countries with strong supervision. this is noteworthy because it does provide us with a fresh perspective on the long - held view