Finally, I will comment more specifically on some of these challenges, and in connection to that also discuss some of the proposed alternative ways of responding to these challenges. The Swedish case Before the banking crisis in the early 1990s, the cooperation between the Riksbank and the Swedish FSA (then the Banking Inspection) was limited to high-level contacts. In their day-to-day activities, however, the two authorities worked in different silos – the Riksbank with monetary and exchange rate policy and the FSA with regulating and supervising financial institutions. The crisis made it very clear to the Swedish authorities that there is a strong link between soundness of financial institutions and macro financial stability, and hence a need for close cooperation between the FSA and the central bank. This economic link is mirrored by a parallel link spanning at least three aspects of regulatory involvement in the financial sector – crisis prevention, crisis management and crisis resolution. In Sweden, these aspects of regulatory involvement are shared between the supervisor, the central bank and the Ministry of Finance. In crisis prevention, the supervisor has the tools for regulating and supervising the institutions, while the central bank might play a supporting role through monitoring the stability of the system and the links to the real economy. In crisis management, the supervisor lacks the financial resources to back any intervention, while the central bank has the power to act as a lender of last resort.
Such an acceptance comes naturally when consumers trust that the goods or services being offered by the company are of the quality that is worth their price, that they are being treated fairly and with respect; and that they do not have ill feelings towards the company. In Western society where there is great awareness for consumer protection, such ideas have therefore not been incorporated in the prescribed governance of the corporation. In the Oriental world, however, the idea of consumer protection has not been well embedded in our culture. Hence there is a need to broaden the principle of governance to include consumer protection. In short, this means that the Board of Directors needs to oversee that the firms provide not only quality goods and services, but that they also treat their customers fairly and with respect. Indeed, the absence of a strong consumer protection standard does not give the corporations the liberty to act in their interests alone at the expense of the interests of consumers. Producers and service providers that start by caring about the interests of customers as part of the principle of non-exploitation and mutual co-existence, will find that they can maintain long standing relation and consumer loyalty. Within the universe of businesses, the domain of financial services, particularly commercial banks, stand out as one of the most prone to abuse. As capitalist organizations, commercial banks are in a convenient position to profit directly from the general public.