That brings me to my last subject – that of culture. 47. Such qualities as integrity and respect are essential to maintain the community’s trust in the financial system. And, to be honest, this is one area where the HKMA cannot impose its will 4/5  BIS central bankers' speeches  on banks. We can push banks to do many things – but cannot enforce morality. 48. I am always reminded of the words of Baroness Onora O’Neill – the British academic and philosopher. She said, I quote, that “overuse of regulation leads to the formula ‘legal equals right’”. In other words, if the industry focuses only on complying with HKMA rules and statutory laws, it will assume all other possible behaviour is legitimate and acceptable. In short, banks will look for loopholes. 49. Of course, that is not the case. It is banks’ responsibility to instil a culture of prudent risktaking, an ethical approach to business, and a focus on treating clients fairly. 50. This is partly a matter of example within the organization – by top level attention at board level, good corporate governance, and by not encouraging short-term risk-taking. 51. This is not simply about complying with HKMA directives, or obeying the law. It is about bankers being aware of their personal responsibilities as custodians of the public’s trust, and as citizens. We cannot do this for you.
The themes are broad. That reflects the diversity of our agenda. They focus on the interactions and intersections between policy areas. They emphasise new challenges and new directions, while recognising that familiar questions facing central banks remain no less important. Today’s conference is organised around them. The first theme covers “policy frameworks and interactions” The re-emergence of macroprudential instruments as part of the policy armoury raises fundamental questions about the interaction of monetary policy, macroprudential policy, and microprudential policy. It is essential to improve our understanding of the relationship between credit cycles and systemic risks. Since credit market developments both affect and reflect potential growth in the broader economy, they – and macroprudential measures to influence them – require careful study by financial and monetary policymakers alike. The advent of a new, enhanced policy toolkit raises vital questions about the effectiveness of individual policy tools; their joint operation; and how they interact domestically and across borders. The second theme covers “evaluating regulation, resolution, and market structures” The financial crisis precipitated a radical overhaul of the approach towards regulation, supervision and resolution. Regulatory policies have shifted from a near-exclusive focus on microprudential resilience to a more balanced emphasis on minimising systemic risk. In the whirlwind of essential change, there has been, however, relatively little assessment of the overall effect of reform on the financial system as a whole. Moreover, our understanding of the “system” must extend well beyond the banking sector to encompass the whole of market-based finance.