Conclusion In conclusion, in a world of open capital markets, the challenges facing banks are very considerable. Central banks can not prevent all banks from getting into trouble, and nor should they try to do so. But central banks do have a responsibility in all our countries to promote the stability of the banking sector.
In my own view, they can best do that by creating strong incentives for banks to behave prudently; by discouraging government ownership of banks, and removing barriers to the foreign ownership of banks; by keeping the focus of monetary policy on price stability; and by not creating the impression that borrowing in foreign currency is a riskless activity.