José De Gregorio: Global confidence crisis – the value of waiting and the coordination failures revisited Keynote speech by Mr José De Gregorio, Governor of the Central Bank of Chile, at the opening of the Post-Graduate Program of the School of Economics and Business Administration of Universidad de Chile, Santiago, 4 June 2009. I wish to thank Pablo García and Enrique Orellana for their helpful contributions and comments. *  *  *  “When, as today, the unknown unknowns dominate, and the economic environment is so complex as to appear nearly incomprehensible, the result is extreme prudence, if not outright paralysis, on the part of investors, consumers and firms. And this behaviour, in turn, feeds the crisis.” (Blanchard, 2009). I want to begin by thanking you for inviting me to open the academic year of the PostGraduate Program of the School of Economics and Business Administration at Universidad de Chile. Most of my presentations are for an audience that is primarily interested in learning about the Bank’s view on the economy, so my lectures tend to focus largely on the national and international junctures and their prospects. On this occasion, I will take advantage of the academic setting that brought us together, and the freedom I was given to choose the subject, to refer to a central aspect of the current global crisis, namely the confidence crisis, focusing on some key concepts that can help us understand what is going on at this global economic juncture.
Corporate governance regulations and best practices We have seen considerable reform in the regulations and codes of corporate governance, as well as the actual practice of corporate governance in the Asian Roundtable economies. For instance, Pakistan, Chinese Taipei and Thailand all adopted new codes in 2002, while new or updated codes have been adopted in Bangladesh, Hong Kong, Indonesia and Korea since 2003. This has yielded visible benefits. There is greater clarity in many Asian economies regarding the fiduciary duties of the directors of listed companies. There has also been progress made in terms of more independent directors being introduced to the boards of listed companies in the Asian region . Accounting rules have also been beefed up across the region. Some of the Asian Roundtable countries have made significant moves towards convergence with international standards and best practices on accounting. China, India, Indonesia and Philippines, have for example revised their accounting standards to bring them more in line with international standards. Corporate governance in Singapore Corporate governance in Singapore has similarly undergone evolution. I shall leave it to the speakers from the Singapore Institute of Directors and the Singapore Exchange to share on these more fully. I will talk briefly instead about our overall approach to corporate governance. Regulatory framework – balance of mandatory rules and best practices First, let me touch on the regulatory framework for corporate governance. In recent years, we have moved away from a merit-based approach towards a disclosure-based approach.