tax payers to loss. the united states has put a resolution regime in place largely through the dodd - frank act. europe is supposed to be on the verge of doing so. asia is expected to follow a similar fsb regime. here at home, the collapse of cl financial and the failure of clico and clico investment bank ( cib ) demonstrated that such an effective resolution framework was conspicuously missing, and is still missing. it also compelled the government to provide guarantees to clico ’ s liabilities, and the dic to liquidate cib ’ s good but also, in some cases, poor quality assets, in what is now turning out to be the most complex liquidation exercise in the caribbean. as you can appreciate, these rescue actions are costly and run the risk of encouraging further moral hazard, that is, financial institutions might be tempted to take on even more risks in the future because they expect to be bailed out if their actions misfire. best practices for deposit insurance systems ladies and gentlemen, in their quest to build safer financial systems, many countries are rethinking the design of their deposit insurance systems. they are assisted, in this respect, by the international monetary fund ( imf ) which has compiled a list of international best practices for deposit insurance systems around the world. on the basis of its research, the imf recommends the following best practices for a deposit insurance system : 1. be explicitly defined in law and regulation with a mandate and measurable objectives clearly understood by member institutions and the general public ; 2. be mandatory for financial institutions and accountable but free from unreasonable political interference ; 3. maintain good relations with other agencies in the safety net, especially the central bank which is the lender of last resort ; 4. allow supervisors a set of prompt corrective actions, resolve failed financial institutions promptly, and provide low coverage and pay out or transfer resources quickly ; and bis central bankers ’ speeches 5. have timely access to accurate information on the condition of its members to overcome the problem of asymmetric information when a financial institution knows its conditions better than anyone else, charge adequate risk - adjusted premia, invest its fund prudently, and have government backing to avoid insolvency when unexpected failures occur. new dic initiatives ladies and gentlemen, the dic can be neither tardy nor reactive in strengthening its part of the national financial safety net. in this regard, the board of management of the dic has formulated a strategic plan to

a target, and again this happened gradually rather than in a single, decisive act. some of the key elements of the inflation - targeting approach were in place quite early. the conceptual basis of such an approach, with a focus on inflation as the policy objective, no intermediate objective, interest rates as the instrument, and a transmission process that works via the effect of interest rates on private demand, had been analysed in a number of pieces that the bank published in 1989, including its conference volume. what we now consider one of the key elements of the policy framework, the explicit announcements of cash rate changes, with explanations of the reasons for each change, began in january 1990. over time, the bank ’ s published commentaries on monetary policy and the economy became more detailed and developed a stronger inflation focus. the numerical objective of 2 - 3 per cent inflation began appearing in public statements by governor fraser in 1992 and 1993. the cumulative effect of all these developments was to establish an inflation - targeting regime broadly comparable to those being developed in a number of other countries around the same time. while there was no individual decisive event, international comparative tables such as those published by the bis date the change in australia from 1993. a final element was added with the joint statement on the conduct of monetary policy, made by myself and the treasurer on my appointment as governor. the statement gave the government ’ s formal endorsement to the independence of the reserve bank as contained in its act and to the 2 - 3 per cent target. it also provided for enhanced accountability through semi - annual statements and parliamentary appearances. several other countries adopted inflation targets around the same time as australia. a recent survey by the bis counts seven inflation targeters, making this currently the most numerically popular regime among medium - sized oecd countries ( table 2 ). as had been the case with previous regime changes, the immediate reason for change in many cases was either a breakdown of a previous regime or dissatisfaction with its performance. in the united kingdom, sweden and finland, the trigger was the collapse of fixed exchange rate commitments in 1992. new zealand and canada adopted their targets in a deliberate strategy of inflation reduction. australia was somewhat different in that there was no crisis that needed to be responded to, and the target was developed to cement in place an inflation reduction that had already been achieved. table 2 : inflation targets country target adopted current target new zealand march 1990 0 - 3 % canada february 1991 1 - 3 % united kingdom october 1992 2½ % sweden