cyprus. first of all, that is economically plausible : capital flows from highly developed countries into countries that are catching up economically. in our case, however, the inflowing capital did not finance a sound catching - up process. instead, it financed house price bubbles in some countries – such as ireland and spain. elsewhere, it funded excessive government consumption – for example, in greece. the inflowing capital did not fund sound growth : instead, it masked an existing lack of competitiveness and, in fact, made it even worse. and it was precisely these structural problems that were the breeding ground for the crisis. what was the situation at the european level? here, it was mainly shortcomings in the framework of monetary union that laid the ground for the crisis. in order to understand these shortcomings, it is important to know the particular features of monetary union. the european monetary union is special because it combines a single monetary policy with national fiscal policies. the monetary policy for the 18 countries of the euro area is decided by the governing council of the ecb in frankfurt. however, the fiscal policies of the 18 members of the euro area is a matter for the national policymakers – each country decides itself on its own government revenues and expenditures. given such an imbalance of responsibilities, the individual countries have incentives to borrow. this incentive to borrow, this “ deficit bias ”, was also recognised by the founders of the monetary union. in order to reduce it, they did two things. first, they created explicit rules on borrowing in the form of the stability and growth pact. this pact was intended to keep a tight check on national fiscal policies. second, they incorporated the “ no bail - out ” principle into the maastricht treaty : no euro - area country was to be liable for the debts of another member state. thus, individual responsibility was to be the guiding principle for fiscal policy in the monetary union. each country was itself to bear the consequences of its own fiscal policy. these rules were intended to keep borrowing by the euro - area countries within reasonable limits. but rules were not the only means of achieving this. the financial market actors, too, were to ensure that that the euro - area countries did not incur excessive debt. bis central bankers ’ speeches the idea behind this is simple : if a country were to become excessively indebted, it would only be able to borrow on the financial markets in future at very high rates of interest. this means

nascent area that mas is studying together with an industry grouping. this relates to data ethics such as on fair and transparent use of data by financial institutions. i am sure this will be a discussion topic in future forums. managing cyber threats 26 given the technological developments in the financial services sector, a key priority area for regulators must be the work on cybersecurity. to do this well, regulators will have to work in close partnership with financial institutions, law enforcement agencies, sector agencies such as in telecommunications and power, as well as fellow regulators given the often cross - border nature of cyber threats. to further foster the exchange of cyber intelligence in the region, mas collaborated with the financial services – information sharing & analysis centre ( fs - isac ) to establish an apac 4 / 5 bis central bankers'speeches regional intelligence and analysis centre. this centre in singapore provides 24 / 7 coverage of actionable intelligence and resources to respond to incidents. mas also implemented a 24 / 7 sectoral security operations centre ( soc ) to obtain information from intelligence sources on cyber threat targeting our financial sector. we have partnered the association of banks in singapore ( abs ) to update mas ’ technology risk management guidelines. also in partnership with the abs, we are in the process of establishing guidelines for “ redteaming ” to enhance cyber security testing. 27 i know that this theme of technology will feature prominently over these two days. such mutual sharing and learning will be an important aspect of regulatory up - levelling. integrity and conduct 28 last but not least, let me wrap up my remarks by highlighting the importance of strong integrity and proper conduct in the financial industry. no amount of regulatory reforms or supervision can assure a stable financial system if the culture and conduct of firms and individuals are flawed. around the business complexities of different firms, the core should be the same – a business culture centred on doing right and doing good. 29 mas will be stepping up our supervisory reviews on various aspects of risk governance and culture in financial institutions. recently, we conducted a culture and conduct survey among a number of the key institutions. based on the survey responses, we are carrying out dialogues to ascertain commonalities and differences in industry practices. we are sharing our supervisory experiences with other regulators to learn from one another. from these, we hope to provide the broader industry with our observations on best practices and areas for improvement. conclusion 30 i have probably spoken longer than i should. i think this only goes to show the many