effectively allocated, resulting in a waste of resources and significant negative impact on the long - term growth efficiency. although the financial sector will give rise to risks, it can also absorb risks. in fact, the financial sector absorbs some of the risks produced by the real sector, and plays the role of price - discovery for the real economy. if performing well, the financial market can serve to absorb, buffer and resolve risks. if we hold the view that the objective of financial sector reform is to make the financial institutions stronger and healthier, measures need to be taken in many areas. first, the government should properly handle the burden of non - performing assets of the financial institutions left over from the past or during the transition period. second, sound financial, accounting, loss provisioning and tax systems need to be set up to create a favorable institutional environment to enable the financial institutions to develop soundly and provide good financial services. third, the government should remove unwarranted controls and establish effective incentives to encourage the financial institutions to improve their services and contribute to better allocation of resources. fourth, steps need to be taken to promote competition - based market mechanisms and eliminate unnecessary price control to enable prices to play a larger role in the economy. fifth, measures should be taken to help the financial institutions to improve their ability to properly set the prices, including on the money market and capital market. sixth, we also need to take active and steady steps to develop various instruments including the financial derivatives that can help form an effective pricing mechanism in the market. seventh, clear strategies on the intermediate services, including accounting, evaluation and credit rating, need to be formulated taking into account both the current need and long tem development of the market. second, principles and guidelines of corporate governance need to be further clarified. many people have realized that improving corporate governance is of crucial importance to the entire reform. nevertheless, the concept and content of corporate governance have yet to be clarified. the basic requirements of corporate governance are set in the company law, which needs further improvement in china. on the other hand, the company law does not encompass every aspect of corporate governance. corporate governance involves the agreements or practices outside the stipulations of laws and regulations and those of the self - disciplinary organizations as well as the cultural traditions. in china, different departments or institutions have different understanding for the requirements of corporate governance. we can see that these requirements have major omissions, and no guidelines have been given to resolve the main

the challenge looking forward is to complete the process towards closer union and not settle for the “ quick fix ”. the people of europe want closer cooperation in economic and financial matters. eurobarometer surveys find cross - country majorities in favour of closer cooperation to end the crisis. and this is ultimately unavoidable, given the state of political union between countries that monetary union de facto creates. it is now a time for politicians to be bold and courageous, to recognise these trends, and to complete as soon as possible the great project begun 60 years ago towards “ ever closer union ”. thank you for your attention. bis central bankers ’ speeches