people, and the nature of the skills needed to conduct the organization ’ s activities. time will not permit me to cover this thoroughly, so let me cover a few items with a very broad brush. what goes in for starters, the conduct of the people in any organization will be strongly influenced by incentives. let me mention the “ big three. ” bankers, like lawyers, want to do [ 1 ] quality work, with people they like and respect, and [ 3 ] receive fair recognition in return. i will touch on all three but will focus on two species of recognition : compensation and promotion. each should be tied to ethical considerations. if the only consideration with respect to compensation and promotion is how much money the individual made for the firm, then that communicates a message that is inhospitable to a strong ethical culture. a second key component is what i call “ character at the top. ” the usual expression is “ tone at the top, ” and it refers to the message from the people who occupy the upper most positions in any organization ( the board of directors and the “ c ” suite ). my worry with the typical expression is that it tends to focus on words, rather than conduct. the implication is that if you sing the right notes in the right key then all will be fine. i do not believe this. employees will be influenced by the actions of key management, and not merely by the songs they sing. if those actions are in harmony with stated mores, then the combination should foster a strong ethical culture. but if the observed actions are not congruent with the words ( or, worse, conflict with the words ), then employees will follow suit : they may say the right things, but they will not behave the right way. worse still, they will sense that they work for a firm lacking in integrity. this has long ‐ term, deleterious consequences. recall that one of the key attractions in working for a particular organization is association with people who are liked and respected. do people like see corporate executive board, research reveals that integrity drives corporate performance : companies with weak ethical cultures experience 10x more misconduct than those with strong ones, press release, september 15, 2010. see also anthony salz, salz review : an independent review of barclays ’ business practices, 189 ‐ 191 ( app ’ x c ) ( discussing the impact of culture on two archetypes of employee behaviors, and collecting sources ). somewhat tautologically,

. a strong ethical culture also attracts the best and the brightest personnel, who will seek out the bank as the place to build a career doing high quality work, for fair compensation, with people they like and respect. as for those with whom the bank does business, they may come to see the organization as customer focused, looking to serve them well, and not turning them into the next “ profit opportunity. ” finally, from the perspective of the supervisory community, an industry comprising personnel who have a strong ethical culture will be a safer and sounder industry, certainly safer and sounder than an industry full of miscreants. this could be a powerful factor toward financial stability. thank you for your kind attention. christine lagarde, “ economic inclusion and financial integrity, ” address to the conference on inclusive capitalism, ” may 27, 2014. the archbishop offered these comments at an october 12, 2014 panel discussion that was part of the international monetary fund 2014 annual meetings. a video of that discussion is available at http : / / www. archbishopofcanterbury. org / articles. php / 5426 / archbishop ‐ to ‐ take ‐ part ‐ in ‐ imfworld ‐ bank ‐ panel ‐ onethics ‐ and ‐ finance. notably, the archbishop described his role at the conference as a “ lion in a den of daniels. ” even the skeptics of cultural reform concede that there is “ almost universal accord that remuneration structures contributed to excessive risk ‐ taking in financial institutions and that excessive bonuses paid on anticipated accounting profit at the time of deal origination distorted decision ‐ making and resulted in asymmetric riskholding. ” paradigm risk consulting, to boldly supervise..., february 2014. see dudley, enhancing financial stability by improving culture in the financial services industry, supra n. 4. bis central bankers ’ speeches