agency is not a substitute for sound corporate governance practices. ultimately, banking system risks are most likely to be reduced to acceptable levels by fostering sound risk management practices within individual banks. instilling sound corporate governance practices within banks is a crucial element of achieving this. as the commonwealth secretariat's report notes, there are a number of ways in which corporate governance in the financial sector can be strengthened. these include : · having a well designed and enforced company law ; · having codes of principles developed by professional or industry associations, setting out desired attributes of corporate governance, and associated educational and consciousness - raising initiatives ; · maintaining high quality disclosure requirements for banks and other companies, based on robust accounting and auditing standards ; · adopting measures to strengthen market disciplines in the banking sector, including by promoting a contestable and competitive banking system and seeking to ensure that bank creditors are not fully insulated from loss in a bank failure ; · effective banking supervision arrangements, with particular emphasis on policies that encourage sound governance and risk management practices ; and · leadership by example, including the adoption of sound governance, accountability and transparency practices by central banks and regulatory agencies. new zealand's approach to financial stability against this background, let me briefly summarise the new zealand approach to promoting financial stability. this has three main strands : · promoting self discipline by banks in the management of their risks ; · fostering effective market discipline on the banking system ; and · supervising banks for the purpose of promoting financial stability, but seeking to avoid supervisory practices that might erode market discipline and weaken the incentives for bank directors to take ultimate responsibility for the management of risks. let me elaborate on each of these in turn. banks'self discipline in managing risks banking supervision in new zealand places considerable emphasis on encouraging banks'self discipline in managing risks, primarily by reinforcing the role of bank directors in taking ultimate responsibility for the stewardship of their banks. since the mid 1990s, when a new public disclosure framework was introduced for banks, a key mechanism for encouraging banks to manage risks prudently has been the need for banks to issue public disclosure statements each quarter. the disclosure statements are in two forms : a brief key information summary, which is aimed at the ordinary depositor ; and a more comprehensive general disclosure statement, which is aimed principally at the professional analyst. the key information summary contains a short summary of information on the bank, including : · the bank's credit rating ; · the bank's capital ratio, measured using the

##ence in the cash system and its vulnerability to outages of power, data and roading networks. given the increased likelihood of extreme weather events in the future as a result of climate change, this resilience needs to be enhanced. we will continue to explore synergies between inclusion and stability as we develop our approach to financial inclusion. we are doing so in concert with our council of financial regulators partners, for which'financial inclusion'is one of 5 priority themes. 2 / 2 bis - central bankers'speeches