The promise of high returns is so tempting that individuals who are in other circumstances perfectly rational and ready even to advise others of good investment outlets get carried by enchanting talks and end up losing their money. 2  BIS Review 82/2009  The responsibility of microfinance practitioners The wide-spread existence of spurious microfinance institutions in the society projects the entire microfinance industry as a fraudulent activity in the eyes of the public and law enforcement authorities. This is not a healthy sign for the future of microfinance industry at all. Microfinance practitioners should put a stop to this unhealthy development by establishing a proper governance structure in microfinance institutions. They teach the poor of the importance of and the need for leading a responsible life. This responsible life includes behavioural traits like being truthful, being honest, being respectful and being exemplary. The cultivation of these qualities in life makes the poor wholesome individuals and that is the ultimate goal of any microfinance intervention in the society. If the microfinance practitioners do not practise what they preach, then, it is a serious lapse of the governance structure of microfinance institutions. Since governance principles are rules of good behaviour and there is no effective way of ensuring their proper practice, the practitioners should make an extra effort to follow them. It requires full commitment and devotion on the part of microfinance practitioners and, in turn, depends on the personal qualities which they have cultivated in themselves.
Christian Noyer: A new regulatory framework for a new financial system Speech by Mr Christian Noyer, Governor of the Bank of France, at a round table discussion at the University of Paris-Dauphine, Paris, 11 December 2008. *  *  *  Ladies and Gentlemen, It is a great pleasure for me to take part in this round table discussion. Today, the prevailing view is – and justly so – that it is necessary to rethink financial regulation. There are two reasons for this: a)  Financial markets and banks are, more or less strongly, confronted with problems of asymmetric information;  b)  Operational inefficiencies may arise, leading, in some extreme cases, to the seizing up of certain market segments. Needless to say that these imperfections are interconnected. In many respects, the financial crisis is the expression of these imperfections. Three examples can be used as an illustration. The underestimation of risk and the mispricing of assets during the upswing of the financial cycle show that markets may generate excess investment in certain sectors of the economy (e.g. the US real estate sector). Furthermore, it appears that financial innovation and the change in banks’ economic models have resulted in a significant increase in information asymmetries and, more importantly, in lower incentives for economic agents to pay attention to these asymmetries. Lastly, the fact that some market segments seized up during the crisis suggests that some infrastructures necessary for their functioning are lacking.