to a risky environment. corporate governance of banks is an essential element of sound regulatory architecture. the regulatory response is an imperative of ethics. is the business of business just business? milton friedman had a view that corporate executive ’ s responsibility generally will be to make as much money as possible while conforming to their basic rules of the society, both, those embodied in law and those embodied in ethical custom. the objective is the maximisation of consumption and production. “ the business of business is just business ”. this is not an axiom one can concur with. if you consider the business of companies historically, it has embraced colonialism and slavery! so the element of ethics must always underlie necessity of both business personal and organisational conduct. formal codes of ethics while many of the governance issues that organizations face are not new, the environment in which they confront them today is more challenging than ever. many companies are adopting legal compliance mechanisms which address ethics or conduct issues in formal documents. rbi ethics @ work the rbi, with the assistance of professor dipankar gupta, who is also a director on the rbi central board, has formulated a code of conduct for itself, which we term ethics @ work. you may well ask, why an ethics manual and i quote from the ethics manual “ an ethics manual promotes : solidarity among colleagues ; pride and commitment to working for the organization ; personal aspirations that are aligned with organizational goals. ” the ethics manual is expected to define and clearly set out what will be deemed to be acceptable behaviour. we hope that this will promote and ensure high standards of practice and also establish a benchmark for self - evaluation lay down the mainframe for professional behaviour and responsibilities enable a sense of occupational identity ideals we can clearly ascribe to. the written code of ethics will be useful for socialization of our new recruits in the organization, serve as an implement of employee training. be a benchmark transgression of the same, will invite disciplinary action. it will also help in dispute and conflict management. the moral dilemmas, the approach - approach conflicts will be more easily resolved with reference to the touchstone of the code of ethics. it clarifies the organisation ’ s expectations from the employee and vests on enshrining complete transparency. this is a formal code of business conduct and ethics, to be ascribed to and strictly adhered to by all employees. it is morally incumbent upon them to do so. bis central bankers ’ speeches some organisations also have

; a significant share in world trade ; liquid, open and large financial markets in the currency issuing country ; and also the policy credibility to inspire the confidence of potential investors. there is a debate on whether the sdr can be a reserve currency. for the sdr to take on this significant role, several prerequisites have to be in place, which are now well known and need no elaboration here. at the present time, the sdr does not satisfy these conditions. thus, we see the move to a multicurrency world as a gradual evolution. protectionism 12. the last issue i want to raise concerns protectionism. recent international developments mark an “ ironic reversal ” in the fears about globalization. previously, it was the emes which feared that integration into the world economy would lead to welfare loss at home. those fears have now given way to apprehensions in advanced economies that globalization means losing jobs to cheap labour abroad. 13. there is concern in some quarters that even as open protectionism has been resisted relatively well during the current crisis, covert protectionism has been on the rise. the short point is that in the years ahead, the pressures for protectionism will mount, and protectionism will also take new forms. global welfare will be maximized when collectively we resist short - term pressures, and put our collective long - term interest ahead of individual short - term advantage. global cooperation 14. mr. chairman, the thrust of all that i have said is that global challenges demand global solutions. the need for global cooperation in solving our most pressing problems of today is vital. the crisis has taught us that no country can be an island, and that economic and financial disruptions anywhere can cause ripples, if not waves, everywhere. the crisis also taught us that given the deepening integration of countries into the global economic and financial system, uncoordinated responses will lead to worse outcomes for everyone. the global problems we are facing today are complex, and not amenable to easy solutions. many of them require significant, and often painful adjustments at the national level ; and in a world divided by nation - states, there is no natural constituency for the global economy. at the same time, the global crisis has shown that the global economy, as an entity, is more important than ever. the imf is central to these reforms so that it continues to spearhead and weave together the fabric of international cooperation. this is in the common interest of all of