and sell sides. it is a comprehensive set of global principles on good practice in the fx market, and it is intended to promote a robust, fair, liquid, open, and transparent market. the tma has already incorporated the code into its own code of conduct. so i would urge all treasury market practitioners to study the code carefully and ensure that they and their firms fully comply with its provisions. 11. as i have said many times before, no external policing or enforcement is a substitute for good corporate culture that supports high ethical standards and values. if one asks any of the financial firms, they will without hesitation say that their corporate culture is to place customers ’ interest before their own. however, when you probe further, you will find out that not all of the financial firms have promulgated an explicit corporate culture statement. for those that have such statements, not many of them have a systematic way of ensuring that the values and ethics stipulated therein can filter down different levels of the firms and be understood by the staff and their supervisors. for those that have made some efforts to promote good corporate culture, many have not done enough to ensure that their incentive system, such as pay, bonuses, promotion etc, is aligned with the values that the firms seek to promote. 12. we have seen far too many examples that during the global financial crisis ( gfc ) how some financial firms and their employees breached the trust of their customers by selling toxic products to them due to misaligned incentive system. in these horrific examples, we often witnessed that greed or short term profits were the main factor causing the management of the financial firms to lose their perspective and common sense. however, in the case of wells fargo, which survived unscathed amongst the us banks during the gfc, it revealed another shocking fact. even though there could not have been any meaningful financial gains by the firm, the incentive system of the bank ( i. e. by paying a cash reward for every new account opened ) had prompted some of its employees to commit misdeeds that breached the trust of the customers and seriously harmed the reputation of the bank. the case is a powerful testimony that corporate culture, however good, must be aligned and reinforced by the appropriate incentive system across the entire firm at all levels. this is why the hkma issued a circular earlier this year requiring the boards of locally incorporated banks to form a board level committee focusing on corporate culture as well as the compensation system. many banks have told us that

, demographics and productivity trends were more favourable than they are today. in the past, we deleveraged during times of strong global growth. in the past, our exchange rate acted as a valuable shock absorber, helping to smooth the rebuilding of competitiveness that can only sustainably be attained through productivity growth. today, our demographics have turned, our productivity growth has slowed and the world is undergoing a competitive deleveraging. we might appear to prosper for a while by consuming beyond our means. markets may let us do so for longer than we should. but if we yield to this temptation, eventually we, too, will face painful adjustments. it is better to rebalance now from a position of strength ; to build the competitiveness and prosperity worthy of our nation. bis central bankers ’ speeches