also recognised that good corporate governance reinforces sound regulation and supervision. it contributes towards maintaining market confidence, and strengthens transparency and accountability. for corporate governance to work, good corporate practices need to be instilled and embedded in all aspects of the operations and at all levels within the organisation. to succeed in the new environment, institutions will require qualified board members and management teams that exhibit a high degree of professionalism. in addition, transparency and disclosure is essential, particularly in a rapidly changing environment and greater attention is being accorded to make banking systems more transparent. while the comprehensive and timely availability of financial information will enhance market discipline in emerging market economies, the disclosure of information must be complemented with the ability of the market players to analyse, digest and appropriately interpret the information to achieve the desired results. closely related to this is the need to strengthen the framework for consumer protection to provide an avenue for redress in cases where consumers are placed in a disadvantaged or unfair position resulting from financial transactions taken due to lack of transparency and understanding. the move towards the adoption of the supervised market approach requires continuous efforts to enhance product disclosures and to elevate the level of financial literacy of consumers. dealing with consumer awareness and education require considerable time and commitment. while recognising the potential benefits of liberalisation to the domestic financial system, the need to ensure the proper sequencing, and to manage the liberalisation process must be accorded importance. financial systems in emerging economies have and are expected to continue to play a significant role in the economy. as such, the process of international integration of the domestic financial system has to be paced with developments in the domestic system so as to ensure that the system is adequately prepared to cope with the challenges arising from the liberalisation process without destabilising effects on the domestic economy. the liberalisation process must be managed with respect to identifying the potential sources of risks to the system. experience has shown that the timing for opening up of the financial system will need to be sequenced and guided by the objectives to develop a more diversified economy where the respective sub - sectors and segments of society have access to adequate financial services ; and to ensure the enhanced and meaningful contribution by domestic financial institutions to the economic growth and transformation process through capacity building. in achieving these objectives, a key trade off is between the need to enhance institutional capacity and the need to phase in competitive forces through the appropriate sequencing of market liberalisation. it is therefore, important that the liberalisation process is sequenced

patrick honohan : financial regulation in ireland – past, present and future speech by mr patrick honohan, governor of the central bank & financial services authority of ireland, at the financial services ireland annual dinner, dublin, 1 december 2009. * * * this evening i want to say a few words about the past, the present and the future of financial regulation in ireland. as far as the past is concerned, it is conventional to assume that, in the recent words of judge richard posner, applied to the us regulatory agencies in the run - up to their own crisis, “ ignorance and inattention ” were at the heart of regulatory failure. whatever else about that assessment, it hardly represents an explanation. nor is it credible that a few simple rules like “ no 100 % mortgages ” would have prevented the disaster that has occurred. in seeking a deeper understanding of why things went wrong, i have been struck by the disruptive effect in ireland of the attempt to adopt the new international fashion in supervisory practice that emerged in the late 1990s. this new fashion, which later underpinned aspects of the basel 2 standard, involved a shift from scrutinising the accounts, the loan portfolio and other aspects of the books of financial firms, to focusing on procedures and models. the motivation for this shift was the rapidly growing complexity of banking and other financial business, including the use of derivatives and complex hedges. precisely because of the rapidly growing complexity of banks ’ business models, a supervisor who only looked at individual parts of a bank ’ s business ( i. e., their exposures ) on a piecemeal basis, without reference to the correlation of risks across those parts, would have a false picture of the institution ’ s overall risk. in addition, the wider range of instruments being traded and held in bank portfolios meant that, not only could an institution ’ s exposure to market risks change dramatically from day - to - day ( or even hour - tohour ), but there were growing operational risks related to the difficulties of controlling a complex portfolio. this approach envisaged the supervisor standing back from individual transactions and loans. instead, the supervisor looked in a holistic way at the banks ’ systems, at their corporate governance and their risk procedures and models and control structures and confirmed they were in place and in operation. the champions of the this approach rightly pointed to the importance of ensuring that banks had good systems and incentives for remaining safe and sound. there is much