“We need to create a trust in risk management system and supervision”
Keynote speech by Bank of Thailand governor Prasarn Trairatvorakul at The Asian Banker Summit 2012 on 26th April on trust, progress on global regulation reforms and their effects on Asia. May 03, 2012 | Prasarn TrairatvorakulLadies and Gentlemen, It is an honour to join all of you today, and to welcome leaders of Asian banking community to Bangkok. The theme of this year conference, “Trust as a pillar of the industry”, highlights the fact that the global financial market stands at an important cross-road. The topic of trust inevitably arises after a crisis. The cross-road is about how to reform regulation, that is, how to re-regulate. This is the juncture which we have reached today, with reforms proposals such as those by the Basel Committee, the Financial Stability Board, or Dodd-Frank Act in the US. All these are attempts to rebuild trust and confidence. It is well known that trust is the cornerstone of the financial industry. But it should also be added that, trust alone is not enough. We also need to have a good dose of healthy skepticism. The reason for this is that we must avoid, on the one hand, overly trusting market mechanism, or on the other hand, overly trusting in regulation.This is because of the rapid changes in the financial system and how risk is transmitted. The last crisis showed how financial innovation and complexity of bank business model overtook risk management and regulation in the west. In Asia, economic and financial liberalization is a powerful driving force that is reshaping our financial landscape today. This could potentially open up the gap between risk and our ability to manage it. So what should be our strategy to build trust, but avoid being blinded by our sense of security? The strategy to deal with this is to have trust that is counter balanced by well informed debate on risk management, supervision, and good governance. So, we need a good dose of well-informed skepticism, as well as financially literate public. Let me turn to the progress on the global efforts to reform regulation. Where are we today? In all of these reforms--be they Basel or FSB--the questions we ask are these. Have we ... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Asian Banker Summit 2012, Regulation, Risk and Regulation, ThailandAsian Banker Summit 2012,riskregulation,Risk and Regulation,Thailand, Asian Banker Summit 2012,Regulation,Risk and Regulation,Thailand, Keywords:Prasarn Trairatvorakul, Bank Of Thailand, Basel Committee, Financial Stability Board, Dodd Frank Act Prasarn Trairatvorakul, Bank of Thailand, Basel Committee, Financial Stability Board, Dodd Frank Act
|