financial instruments. as already underlined on the occasion of previous hearings in front of you, this calls first for much more transparency, without any consideration of vested interests ; second for much less short - termism in the decision - making processes, contrary to the most recent trends ; and third for a systematic elimination of the procyclical aspects of our regulatory, prudential, accounting and taxation rules, which are amplifying considerably the fluctuations that are inherent in the functioning of market economies. the financial stability forum ( fsf ) has identified the main avenues for such reforms. what we now need is strategic lucidity and, where appropriate, a great deal of political energy to counter considerable vested interests. the g20 and the imf are and will be decisive in this respect. but a much better functioning of the financial sphere does not suffice. we also need sound macroeconomic policies that are sustainable in the medium and long run. in particular, we need to avoid the creation of the large domestic and external imbalances which are very much at the root of the present difficulties. an effective surveillance of macroeconomic policies of the major systemically important economies is of the essence. only the imf can perform this decisive function, provided its mandate is strengthened. in terms of institutional set - up, we need two major improvements : • first, the international financial architecture requires a strengthening of the informal groupings, in particular the fsf and the g20. the fsf is unique in that it links all the authorities and institutions that have a systemic influence on financial markets, which are very largely decentralised and – for many of them – independent from the political sphere. the necessary enlargement of the fsf is key. particularly important in a time of global crisis has been the new authority of the g20, which is a truly global informal grouping in comparison with the g7, which itself continues to be useful in a situation where the turbulence comes from the industrialised countries. • second, on top of the imf ’ s strengthened surveillance mandate, the governance of the international financial institutions, particularly the imf but also the world bank, should become more effective and representative. in particular, a full representation of emerging market economies, commensurate with their importance in the global economy, is indispensable. * * * by way of concluding my introductory remarks, i would like to stress two points. first, as regards euro area policies, persistent wage growth

bank will survive that does not set its clients ’ interests center stage, instead of sales targets or profits. i find it encouraging to learn that in many emerging markets clients are still put first. this most likely explains in part why the banking sectors in many emerging market economies have weathered the financial storm much better than in developed economies. other factors that have contributed to their stability is that many banks in emerging market economies still engage predominantly in plain vanilla banking activities …. … and that they are strongly funded by wholesale funding. furthermore, i find it encouraging that banks in emerging market economies have remained stable despite the fact that they have used quite innovative ways of banking. many emerging markets use ict solutions that are very advanced. such as mobile banking, which allows individuals and msmes to access and transfer money without needing to travel to a branch. your own country, governor velarde, may serve as a fine example here. in your country branchless banking may have been borne out of necessity. but in recent years, this has proved to facilitate access to finance for great many msmes. you have also shown that regulation, even if intensified, can be designed to accommodate these innovative ways of banking while still protecting customers and safeguarding financial stability. customer protection in your country is even set as a top priority. it calls for banks to formally assess the financial situation of the client in order to avoid over - indebtedness. such initiatives have vastly helped to establish a solid msme business and sustainable growth in your country. i am therefore quite confident that also in developed countries, we shall manage to combine intensified regulation with sound msme financing. and that we shall also manage to ultimately motivate our banks to move back towards their core task of servicing the real economy and their customers. ladies and gentlemen, let me conclude. today ’ s conference coincides with the opening of the dutch national money week, later today. during this week, we teach our youngsters how to deal with money in a responsible way. for today ’ s youngsters create the demand for financial products and services of tomorrow. and many of them will become entrepreneurs, setting up msmes themselves. by educating young people in money matters, i hope we can empower them to shape the banking sector to their liking and to their demands, instead of merely enabling them to use what banks have to offer. i thank you all for your attention, and i wish to you all a very interesting and fruitful conference. bis central bankers ’ speeches