this should be weighed against the significant benefits and operational savings from the more accurate allocation of capital to risk. mas will work closely with the local banks to implement the new accord. business and strategic considerations next, banks have to decide how to grow and position their businesses over the longer term, especially the local banks. maintaining margins and cutting costs is necessary in the short term, but beyond that, banks need longer term strategies for staying viable and competitive. after a period of domestic consolidation, the local banks have made several regional acquisitions, but they still remain small by international standards. competition will intensify, within the domestic market because of liberalisation, and internationally because globalisation is continuing. the local banks may well find that in order to hold their own and be viable, they need to grow bigger. possibilities for domestic growth are limited other than through further consolidation. but the region offers considerable opportunities. asia is poised for sustained growth, having emerged from the crisis as one of the most promising regions in the world. countries have gone through a period of structural reforms and transformed their financial sectors. now they are progressively opening up their economies to greater foreign participation. this is attracting interest from major regional and global players. our local banks cannot ignore this game. they need to consider their options carefully. is the way forward to remain a niche player, sizeable in the domestic market, but small by international standards? or must they achieve greater scale by expanding into the region? if so, what strategy will minimise the risks and maximise the benefits of operating in different countries? how can they build strong management teams, to execute a sound strategy well? each bank must answer these questions for itself. their long term profitability and viability depends on their finding the right answers. challenges for the financial sector let me move on to some of the opportunities and challenges for the financial sector. i will discuss three issues - developing the wealth management industry, growing our capital markets, and increasing our human capital. wealth management the asia - pacific is the fastest growing market for private banking in the world. rapid development is producing large numbers of wealthy individuals, and huge amounts of private wealth to be managed. asian savers and investors are increasingly sophisticated and are seeking best of breed products and managers. non - asian clients are increasingly demanding geographical diversification for their assets. institutional assets in asia will also grow progressively as countries reform pensions, and deregulation frees up assets from insurance companies and other corporates for professional management. these

in the countries of the region. our strong legal system and the availability of international legal expertise and product structuring teams equip us to structure complex cross - border transactions. the growing wealth management industry will also generate a steady source of funds for regional investment products. human capital a major issue that concerns all parts of the financial sector is human capital. a distinguishing characteristic of a successful financial centre is that it attracts talented and dynamic professionals from a broad range of disciplines and experiences. they make the financial centre what it is. deepening and broadening our talent pool will be a continuing challenge for the financial sector and for mas. mas and industry players have taken steps together to address this. the institute of banking and finance had been re - organised to better meet the needs of the industry as a financial training intermediary. it will also serve as a platform for the industry to provide regular feedback on manpower needs and issues. the industry has established the financial industry competency standards committee, which will develop internationally aligned competency benchmarks for the whole financial industry. mas is also working with specific industries to address their human resource needs through a manpower conversion scheme. this scheme will help mobilize, train and channel resources to support growth areas quickly. mas will work with financial institutions to build and upgrade talent in the financial sector workforce. singapore has always welcomed talented individuals to live and work here. they have contributed much to the vibrancy of our financial sector. singapore must remain open to talent and continue to be a conducive environment to work and live in, so that we can continue to attract talent here, and also retain able singaporeans. conclusion mas is committed to the vision of singapore as a leading global financial sector, one which is competitive, fosters enterprise and innovation, and maintains high regulatory standards. we have made steady progress toward this goal and must continue to do so. we must never become complacent and satisfied with the status quo, or else we will soon be overtaken and left behind. mas will strive to create an environment where market forces, enterprise and innovation can thrive. we will stay abreast of market developments, and be sensitive to the needs of the industry, without compromising on supervisory standards. our experience has shown that the two are not incompatible ; indeed listening to industry players, without being overwhelmed by them, helps us to become better regulators and supervisors. i am grateful for the full support and cooperation which the industry has extended to mas, and