However, I would like to say nevertheless that the principles which guide monetary policy in modern central banks, and which I have described here, are so general that they should be able to act as guiding stars for monetary policy reform work anywhere in the world. Essentially it is a question of giving the central bank carefully specified – and realistic – objectives, granting it independence in its endeavours to meet the objectives and ensuring that it carries out its work in a transparent manner and is accountable for its actions. It is my conviction that reforms based on these principles will be beneficial to Vietnam, too. Thank you. 8  It can be noted, for instance, that Camen, U. and H. Genberg, (2005), ”An Inflation Targeting Regime for Vietnam”, paper prepared for the VERCON First Annual Conference, Hanoi, May 24, draw the conclusion that the conditions for introducing ”full fledged inflation targeting” have not yet been fulfilled in Vietnam. BIS Review 21/2006  7
The issue is also of interest to the authorities responsible for financial stability. As standardised risk-transfer instruments develop, they are likely to come into wider use. So far, market participants have not properly identified or analysed the likely knock-on effects, whether direct or indirect. For this reason, there is a vital need for improvements in the prudential reporting and market transparency of these transactions; there is also a need for greater harmonisation of the rules and regulations applicable to institutions in different countries and to different types of company. The aim should be to record the risk where it is actually borne, both economically and financially. In addition, the authorities responsible for different financial sectors must coordinate their efforts to jointly identify where risks lie and to measure their extent. The Banque de France and the Commission Bancaire are working to that end with their counterparts in the insurance industry and the securities markets. 3.2  The future solvency ratio will better reflect the economic realities of banking risk  The finishing touches are being put to the solvency ratio, due to come into force in 2006. The new ratio will cover a broad spectrum of activities and risks, based on an approach tailored to the degree of sophistication of financial market participants, both in the G10 and beyond. From a prudential standpoint, the ratio will capitalise on the progress already made in improving risk supervision and control, while making it easier to compare methods at the international level.