A key lesson from this crisis is that risk prevention should focus not only on single financial institution or single sector, but also on systemic risks. Macro-prudential policy is the very solution that addresses systemic risks. After the outbreak of the crisis, the International Monetary Fund and the Financial Stability Board stated clearly that implementing macro-prudential policy should be central banks’ responsibility.
Domain knowledge of the Board members enormously increases the quality of governance and the Chairman should be able to tap this talent to the advantage of the bank. The other aspect relating to the composition of the Board relates to ‘fit and proper’ criteria for directors.