klaas knot : simplicity in the financial sector speech by mr klaas knot, president of the netherlands bank, at the 20th riskminds global risk regulation summit, amsterdam, 2 december 2013. * * * ladies and gentlemen, thank you for inviting me to speak at the risk minds conference today, also as this enables me to congratulate you on its 20th edition. twenty years have passed since the first risk minds conference, and i ’ m glad to say that risk management has made substantial progress during this period. the past few years have certainly underlined the importance of proper risk management. as i see it, risk management is a key building block for ensuring sufficient capital and liquidity buffers in the financial system. strong and reliable financial institutions are one of the vital elements of financial stability. and financial stability in turn is of prime importance to de nederlandsche bank as a central bank and prudential supervisor. and that is because central banks have a mandate to promote financial stability. and we ’ ve seen in recent years, that this is not an easy task. in hindsight, we can say that the financial sector had become too complex and non - transparent. technological advances had created various new financial products and instruments whose risks were often unclear. this particularly held for products and instruments involving the packaging and repackaging of exposures, the sale of cdos ( collateralized debt obligations ) and cdo2s, and the use of sivs ( structured investment vehicles ). the financial sector ’ s increasing globalization has also made it more difficult to assess risks properly. it was because of lehman brothers ’ global presence that its failure had such an impact on the world. in every country where lehman brothers had a branch, its bankruptcy had to be filed for and resolved. the financial environment that we faced in the run - up to the crisis – and, by “ we ”, i mean the public, investors, counterparties, supervisors and regulators – was non - transparent, and the risks were getting more and more complex. and then it all went wrong, and many financial institutions had to be bailed out by governments. it was no wonder that the public ’ s confidence in the financial sector fell sharply. and it still hasn ’ t recovered. how can we regain the public ’ s trust? for one, by making the financial sector less complex and more transparent. the crisis has highlighted various fundamental problems in the design of the financial system. the level of complexity, the

. a follow - up event is planned for later this year, focusing on recent developments in the international payment system. it is a great opportunity for dnb to keep track of indonesia's highly innovative payment system, and dnb is proud to have such a close and fruitful relationship with bank indonesia regarding such an important topic. indonesia is one of the largest and fastest growing countries in the most densely populated region in the world : southeast asia. with a population of approximately 280 1 / 4 bis - central bankers'speeches million people, it is the fourth most populous country in the world. if you take the map of indonesia and you lay it on top of that of europe, it reaches all the way from ireland to kazakhstan. for the dutch participants of this conference : let that sink in for a moment. with a real gdp of around 3. 4 trillion us dollars, it is currently the world's 7th economy. over the last decade, the indonesian economy has expanded at a rapid and robust pace. during this period, real gdp has increased by at least 5 percent annually – except in the covid years of 2020 and 2021. in that same period, inflation has been kept under control : averaging around 3. 7 % per year. this is a testament to the readiness of indonesia's central bank, which raised its benchmark interest rate last month in an effort to support the rupiah. this was a strong policy response, as a strong dollar took a toll on asian currencies amidst market uncertainty around the us federal reserve's rate outlook and escalating global economic uncertainties. indonesia's economy continues to perform strongly, with inflationary pressures moderating, macroeconomic policies returning to their pre - pandemic settings and a stable, profitable financial sector serving businesses and the public. this highlights the maturity of the country's institutions and macroeconomic frameworks as it has navigated a highly challenging global environment. but there are also clouds on the horizon. over the past years, the threats to free trade and investment have increased globally. scepticism about globalisation has grown. international cooperation is in retreat. brexit, ongoing tensions between the us and china, the russian invasion of ukraine and the conflict in the middle east have put further pressure on globalisation. in response to geopolitical developments, countries and blocs are now often likely to pursue strategic autonomy. according to the imf, around 3, 000 trade restricting measures were imposed last year