deposits they collect, capital market intermediaries are required to segregate customers ’ assets from their own monies. this acts as a safeguard for customers ’ funds should the intermediary fail. fund managers are required to appoint independent custodians and fund valuation firms, and be subject to regular audits. bis central bankers ’ speeches market conduct the second regulatory outcome we expect from intermediaries is fair conduct. trades that give a false or misleading appearance of market activity, actions to rig the prices of securities or futures, are all prohibited under our law and severely dealt with. mas works closely with the commercial affairs department to take enforcement actions ranging from civil penalties to criminal action. last year saw the fruition of mas ’ first civil penalty court action. we secured civil penalties against a fund manager who was found by the high court to have window - dressed his portfolio by creating a false appearance relating to the price of one of the component shares. the fund manager and its ceo were ordered to pay a civil penalty of s $ 250, 000 each to mas, as well as costs of the court action. the decision was upheld by the court of appeal. the assistance that we sought, and obtained, from our foreign counterparts was vital to our success in this case. similarly, mas stands ready to assist our international counterparts in their enforcement efforts. earlier this year, the australian authorities successfully prosecuted a former fund manager of an australian bank for insider trading. mas had referred this case to the australian securities and investment commission ( asic ) and provided ongoing assistance during asic ’ s investigations. infrastructure – sound and stable the final component of the capital market ecosystem is the infrastructure that supports the trading of securities and futures. capital market participants trade either on a multilateral basis through organised exchanges, or bilaterally with each other over - the - counter or otc. exchanges the singapore exchange and the singapore mercantile exchange operate the systemicallyimportant securities and futures markets in singapore. they constitute critical infrastructure that must function properly to preserve stability and efficiency. our laws require the exchanges to maintain sufficient financial, human and system resources, have frameworks and processes to manage their risks, and to regulate and supervise their participants. otc derivatives the otc derivatives space has traditionally been the preserve of sophisticated financial institutions which are well placed to assess and negotiate trades among themselves. these financial institutions are regulated by mas and the risks associated with their otc derivatives positions are taken into account under the respective regulatory frameworks for these

mr liebscher wonders whether financial crises are really here to stay luncheon speech delivered by dr klaus liebscher, governor of the oesterreichische nationalbank, at the ost - west konferenz of the oesterreichische nationalbank on the theme of “ financial crisis - a never ending story? ”, held in wien on 23 november 1999. * * * ladies and gentlemen, i have my doubts whether financial crisis is a topic that lends itself well to a luncheon speech, since part of what i am going to say may sound like the analysis of a nutrition expert who warns about bad eating and drinking habits which are not conducive to health and fitness. so when i talk about too much appetite for risk and unsound financial systems and so on, this will hopefully not spoil your appetite for lunch. if it does, i apologize in advance. what i am going to serve you is not a light dessert but a rather heavy main dish with the following ingredients : • first, a reminder of some features of the financial market trends, including the lessons to be drawn for economic policy ; • second, a brief note on recent work in official international fora on financial stability ; • third, an assessment of the relationship between public policy and markets ; • fourth, an outlook on the course policymakers should pursue in the future ; • and fifth, some reasons why financial stability issues are of concern to central bankers. 1. with the new millenium approaching, we clearly have not reached the end of history as one author suggested several years ago. we are rather in the process of transforming our economies, and financial markets have become a driving force behind this transformation, mostly supporting it, but capable of seriously disrupting it at times. global finance, driven itself by technology and liberalization, has brought continents closer to each other and thus increased spillover effects. the trend towards disintermediated finance is going on and financial instruments are becoming yet more sophisticated. financial capital is becoming less complacent vis - a - vis policy errors and more demanding as far as the required return is concerned. the recent crises have shown that policy mistakes tend to be sanctioned drastically by financial markets, and the longer the sanction is delayed the harder it turns out to be. what has further become clear is that stability is a prerequisite for long - term efficiency and sustainable growth - a lesson that appears to be easily forgotten as long as everything