markets and their financial systems as well as global financial institutions that operate in multiple jurisdictions, the need for cooperation will also be crucial in crisis situations. it is specifically in such times that it is in the interest of all the regulatory authorities to coordinate their actions in the interest of achieving a smooth recovery or resolution that could have affected entities or infrastructures in which they have some form of regulatory authority. in the implementation of standards and principles, various authorities with common interests will have to cooperate and collaborate in various areas such as oversight, supervision and recovery and resolution. bis central bankers ’ speeches 4. regulation of financial market infrastructures as mentioned earlier, financial market infrastructures went largely unnoticed until the global financial crisis broke, and although they performed well through the crisis, it was only then that an appreciation was found for the true importance of such infrastructures, reflecting the fundamental role they play in ensuring financial stability. with this in mind, in april 2012, the committee on payment and settlement systems at the bank for international settlements ( cpss ) and the international organization of securities commissions ( iosco ) published new international standards for payment and securities clearing and settlement systems, including central counterparties. the main objectives of the new principles are to ensure a robust global financial market infrastructure, which if faced with the financial shocks of the magnitude experienced in 2007 / 2008, will continue to operate effectively. south africa is expected to adopt these principles and ensure that systemic and prominent financial market infrastructures in its jurisdiction do observe them. these principles will apply to payment systems, securities settlement systems, central security depositories, central counter parties as well as trade repositories. the principles will in most probability be adopted in either of the following ways : • through policy positions that are outlined by regulatory authorities in a transparent manner ; • incorporated in relevant regulation applied by the relevant regulatory authorities ; or • incorporated in law or legal provisions administered by the relevant authority. this will happen in parallel with the regulatory reforms that south africa has chosen to undertake in the effort to drive towards “ a safer financial sector to serve south africa better ” as stated earlier, and it is envisaged that the two objectives will be complementary and aligned. south africa also sees itself as part of the broader region as well as the international community and thus also strives to drive its financial sector development initiatives with this goal in mind. 5. concluding remarks there can be no doubt that going forward we need better and appropriately regulated financial markets, institutions and infrastructures, such that strong

immediate approval by parliament was not required. there is no denying that the conditions could have existed for letting some banks in difficulty to fail had the political situation been different, for example, if elections were imminent in europe, as in the united states. fortunately, this was not the case. nevertheless, it is necessary to reflect on what might have happened. the question that needs to be asked is the following : why do democratic decision - making processes lead to the wrong decisions being taken from the point of view of the common good, not only ex - post, but also ex - ante? the response given to justify the decision to let lehman brothers go bankrupt is that, for citizens in general, and for tax - payers in particular, it is not fair to use public funds to bail out financial institutions which, in the preceding months and years, had accumulated massive profits for their shareholders and executives. obviously, for those assigned the task of deciding whether or not to come to a bank ’ s rescue it is not an easy task to convince the electorate that the future losses must be nationalised, when the past profits were privatised. the rational explanation is that, without the rescue operation, the whole economy would have suffered as a result, with direct consequences for citizens and tax - payers. given the contagion effect which is generated following the collapse of a bank, nationalising the losses prevents an even greater evil being unleashed. the financial sector is different from other sectors, precisely owing to the systemic and contagion effects that a crisis would have on all the other sectors. it is thus in the interests of the individual citizen to support the decision to rescue a bank in difficulty, as the individual interest coincides with the public interest. 2 what happened, however, suggests that the rational arguments that i have just propounded do not always chime with public opinion. again, it strikes me as interesting to ask why this should be the case. to answer this question, it is necessary to enter the realm of the analysis of human behaviour, via the field of behavioural economics. several laboratory experiments have been carried out, which show that, when faced with some economic choices, individuals may behave in ways that are apparently not rational. in general, it has been shown that economic agents are not only motivated by self - interest, as economists have been keen to believe, but are also motivated by considerations relating to fairness and relative conditions. according to some studies, a rise in income is only