an entirely public sector owned industry to the now majority privately owned sector. this shift was one of the main factors which led to improved performance of the overall banking sector. keeping in view the importance of risk management for banks, sbp has put in place detailed guidelines for banks in the area of risk management ( 2003 ), internal controls ( 2004 ), country risk ( 2004 ), internal credit rating systems ( 2007 ), general policies framework which provides broad guidelines for the formulation of polices in the major risk areas, stress testing ( 2012 ) and fraud risk management & reporting ( 2014 ). in addition, we have constantly been refining our regulatory and supervisory oversight. for instance, we have issued separate set of prudential regulations for corporate / commercial banking, consumer financing, sme financing, microfinance & agriculture financing which are updating on an on - going basis. prs for corporate / commercial banking cover four areas of risk management, corporate governance, cdd & aml and banks ’ operations. likewise, stress testing guidelines have been revised extensively in line with bcbs reforms package which provide for a bigger role for stress testing in the determination of capital buffers under pillar 2. moreover, as per pillar 2 of basel capital accord, risk management framework is dealt under the “ internal capital adequacy assessment process ( icaap ) ” of banks, therefore, in order to make the icaap exercise more effective we have issued a standardized reporting template for icaap in december 2012. bis central bankers ’ speeches moreover, a major on - going development is the implementation of basel iii in pakistan from december 2013. our efforts to keep the banking sector well capitalized and have sufficient capital buffers to absorb minor to moderate shocks can be judged from the fact that our banking sector has healthy capital adequacy ratio of 16 %. i am sure you will hear more about the implementation of basel iii in pakistan during the presentation of country papers. as a regulator, sbp has established a comprehensive and well balanced regulatory and supervisory set up to ensure that sound risk management practices are being followed within the banking sector. ladies and gentlemen! in the end, i would like to say that expanding business arenas, globalization of financial activities, emergence of new financial products and increased level of competition have opened up opportunities but also increased the potential risks from such developments. i strongly believe that regional forums such as saarcfinance are very helpful in facilitating knowledge exchange and ongoing collaboration for region specific issues

is essential in crisis prevention and management, as already proved by the experience during the global financial crisis. this role has proactively evolved towards mitigating financial system vulnerabilities even in the absence of deposit runs or banks in default. it is now a fact that deposit guarantee schemes mitigated the recent financial crisis, using every possible instrument available to them, such as : increasing the deposits coverage limit ; expanding the scope of the guarantee scheme ; and providing faster deposit pay - outs or even liquidity support. the outcome of these developments is that a new focus is being placed on deposit insurance in the post crisis period. deposit insurance is now considered as an essential crisis management tool and an important instrument for orderly liquidation of an unsound financial institution. a well - designed deposit guarantee scheme largely supports financial stability and financial crisis resolution by mitigating risks of and maintaining trust in the 1 / 3 bis central bankers'speeches financial system. however, recalling one of the most important lessons we learned from the global financial crisis, despite the mandate given to any institution, no player can alone deal with a systemic crisis and the consequences of strong spillover effects and contagion risks. it is essential that each element of the safety net develops robust mechanisms that aim to resolve financial institutions and stabilize the financial system as smoothly as possible, minimizing the cost to the economy. moreover, financial stability can only be preserved by a well - coordinated financial safety net, which is supported by a resilient legal framework, proper tools and instruments and careful contingency planning for each of its elements. the bank of albania has dedicated much of the past 10 years to integrating the lessons learned from the recent financial crises into a new regulatory framework. our financial safety net is further aligned with international best practices, as we coordinate our roles as supervisory authority, lender of last resort and, recently, resolution authority as well. our post - crisis regulatory framework points towards a stronger banking sector, based on a more solid capital foundation that ultimately serves to protect deposits and taxpayers ’ money. in this perspective, the bank of albania has reinforced banks ’ capital position with higher requirements for core capital and is developing new demands for macro - prudential buffers, to build up the lossabsorbing capacity of banks in case of financial crisis. moreover, the financial safety net already in place was further strengthened with a new mandate for the bank of albania as the resolution authority. a transposition of the brrd, the new