a credible and lasting solution in the eurozone all the more complex and challenging in the years to come. the problems in the eurozone and the us underline the absolute necessity for consistently sound banking practices and governance by banks. the crisis also provides lessons for regulators and the supervision of banks. the imf has found that regulatory intervention in spain lacked timeliness and effectiveness, even though the problems in banking had been identified early on. regulators must be prepared to take early and decisive corrective actions to forestall a build - up of risks in individual banks and the banking system as a whole. bis central bankers ’ speeches further, contagion amongst banks is a fact of life. financial systems can be severely stressed by their weakest points, even if it involves a single bank or a group of small banks. the northern rock episode in the uk was an example in the earlier phase of this crisis. the spanish cajas or regional savings banks are now another. the largest spanish banks are widely acknowledged to be well capitalised, to have lower exposure to the property sector and to have well diversified earnings internationally. but until the troubles in the cajas are resolved, even sound spanish banks are being penalised by higher funding costs, and citizens and tax payers too are exposed. confidence is therefore about banking systems, not just about individual banks. this is all the more why regulators have to be vigilant in spotting weaknesses and requiring corrective actions, both across a system and in individual banks. the weakest point matters. international regulatory reforms the global financial crisis has prompted a major review of international regulatory standards. we have achieved much, with the new rules developed through the basel committee on banking supervision and the financial stability board – new rules on the quantity and quality of capital and liquidity and the ongoing work to strengthen cross - border supervision and resolution frameworks for global banks. the basel committee has proposed several reforms to minimise the risk of failure of global systemically important banks ( “ g - sibs ” ), and to minimise the impact if any of them should fail. it is also recognised that some banks are systemically important within their own domestic markets even if they are not internationally active to the same extent as the g - sibs. the failure of these domestic systemically important banks ( “ d - sibs ” ) can have a major impact on an economy, and indeed unpredictable consequences for a broader region. bankia for example, is not a g - sib. the

why we have progressively opened up singapore ’ s domestic banking sector since 1999. we have allowed greater competition, particularly in wholesale banking where local players are not protected, and increasingly in retail banking too. it has involved some risks. we took a risk. but the result is now widely acknowledged to be stronger and more dynamic local banks, with much improved systems of management, risk controls, technology and expertise. banking liberalisation provided the spur for our local banks to raise their game and compete with some of the world ’ s largest banks while maintaining high prudential standards and they have done well. we had previously announced the government ’ s policy of maintaining the local banks ’ market share at no less than 50 % of total resident deposits. this remains our position. we are committed to having strong local banks at the core of the banking system. in a very real bis central bankers ’ speeches way, our three strong local banks also give singapore the confidence to continue opening up the banking sector to foreign competition. encouraging foreign banks to deepen their singapore roots a diverse international presence and global connectivity must remain key strengths of singapore ’ s financial centre. we host many international banks, who conduct an increasing share of their activities out of their singapore offices. some banks have moved their global heads of business to singapore, or hubbed specific business lines or it operations in singapore. consumers and corporate customers have benefited from the wider range of products and services, offered at competitive rates. the majority of foreign banks in singapore operate as branches, taking advantage of the cost efficiencies arising from branching within an international bank. we continue to support the use of branches for the vast majority of banks in singapore, which are in the wholesale and investment banking businesses. additional measures may be appropriate for retail banks that are important to the domestic market. at the individual depositor level, additional safeguards such as a deposit insurance scheme ( which we already have in place in singapore ) and local incorporation will provide better protection for depositors from problems emanating from other parts of the banking group. local incorporation can also bring benefits to a bank, especially where it has a significant retail presence. liquidity rules under basel iii will require long - term stable sources of funding to comprise a larger share of a bank ’ s total funding. competition for deposits is expected to intensify, and banks that can attract stable funding will gain an advantage. local incorporation can therefore demonstrate a bank ’ s long - term commitment to depositors and other stakeholders in a