. i now turn to a fourth set of causes of banking problems, that can be labelled inadequate corporate governance. this term refers to an absence of the right incentive structure for bank owners, managers, depositors and supervisors to show prudent behaviour. perhaps the best way to throw light on these types of problems is by means of a well - known example, namely the downfall of the us savings and loans institutions. in the early 1980s, the supervisory authorities in the us sought ways to enable savings and loans institutions, which were generally in bad shape, to continue in business. the range of activities in which these institutions were permitted to engage was expanded, capital standards were relaxed and the level of deposit insurance was increased. as a consequence, many savings and loans institutions tried to grow out of their problems by investing in high - risk assets, such as property and so - called ‘ junk bonds ’. the point is that depositors were content to finance these risky investments, because of the generosity of the us deposit insurance at that time. moreover, with low capital standards, equity holders or owners had little to lose. finally, banking regulation in the us did not penalise bank managers for excessive risk - taking and allowed supervisors to delay corrective measures. when the property market started to collapse in the mid - eighties, many savings and loans institutions became insolvent, which eventually resulted in a loss of at least $ 150 billion for the us taxpayers. in order to prevent similar banking problems, bank regulation in advanced and emerging economies must incorporate the right incentives for all participants in the banking system. 13. if you look at the core principles you will find various sorts of incentives in this field. firstly, principle 3 requires that the licensing process should consist of, among other things, an assessment of the bank ’ s ownership structure as well as of its directors and senior management. the explanation of this principle makes clear that if the supervisory agency doubts the integrity and standing of a bank ’ s owner or manager, it should have the authority to prevent a specific ownership structure or the appointment of a certain bank manager. in this way, past imprudent behaviour of bank owners and managers is penalised by excluding them from responsible functions in the banking sector. 14. secondly, core principle 6 prescribes that capital requirements for banks should be no less than those established in the so - called basle capital accord. the basle accord sets minimum capital requirements of 8 % of the risk - adjusted assets of banks. bank

as you might notice, i'm talking a lot about implementation, because that's where my concern lies. it seems that, 16 years after lehman, implementation fatigue has started to set in. political commitment for maintaining financial stability is usually the highest when the collective memory of the last crisis is still fresh. when this memory starts to fade, there is the risk that financial stability is taken for granted. something that can be left to the bureaucrats, to the technicians. not least because there are so many other policy priorities to deal with for governments. but that would be a mistake. we do need the involvement of politicians, of lawmakers, because without them, it becomes even harder to implement necessary regulations. after all, financial stability is the foundation for almost all public policy. if financial stability is gone, as a government you can forget about the other policy priorities. you will spend most of your time drawing up rescue plans for an economy in free fall. so we should not wait for the next crisis. we also need commitment in good times, when the work to develop and implement policy needs to get done. this commitment is even more important in a world that is getting more fragmented, both politically and economically. i am concerned about our capacity to work together on cross - border challenges in such a world. during the global financial crisis, policymakers around the globe were able to respond swiftly and 2 / 3 bis - central bankers'speeches effectively. in a fragmented world, such a swift response could become more complicated. this could prove costly because the most important challenges to financial stability are precisely the cross - border issues that we can only solve if we work together. and to the financial industry i would say : rules that strengthen the resilience of the financial system are in your best interest too. some in the industry view regulation as a constraint, something that limits profitability and imposes undue costs. but it's just the other way around. financial regulation is not an obstacle, it is an enabler of sustainable, long - term growth. globally implemented regulation strengthens international financial stability, levels the playing field, and, in turn, enhances the confidence of your shareholders, clients, and counterparties. strong regulation is not a constraint on the financial industry, it is an asset. 15 years after pittsburgh, strengthening the financial system is an unfinished history. partly that comes with the job. the financial system is always evolving, so our policy also needs to evolve. but,