Wang, Mei, Marc Oliver Rieger and Thorsten Hens (2011), ‘How time preferences differ: Evidence from 45 countries’, NHH Discussion paper, FOR 18. 16  BIS central bankers’ speeches  Appendix Chart 1: Equity market volatility and CDS premia for major UK banks Basis points 350  Average 5yr CDS for UK banks (RHS)  90  VIX (LHS)  80  300  70  250  60 50  200  40  150  30  100  20  50  10 0 2003  2005  2007  2009  2011  0  2013  Source: Bloomberg. Notes: Equity market volatility is shown using the US VIX index. Major UK banks include: Standard Chartered, Santander UK, RBS, Barclays, LBG, HBOS, and HSBC. Chart 2: Household views of the Bank of England’s 2% inflation target is too high  or too low  or about right Percentages of respondents  70 60 50 40 30 20 10  1999  2001  2003  2005  2007  2009  2011  2013  0  Source: Quarterly Bank of England GfK/NOP Inflation Attitudes survey. Notes: Respondents were asked the following question “The Government has set an inflation target of 2%. Do you think this target is too high, too low or about right?”. Respondents who answered “no idea” are not shown on the chart. On average, around 14% of respondents answer in this way. Data are to 2014Q3.
Thus, the human and societal cost is very real. It is pervasive and destructive, rippling across society, and if left unattended, will accumulate over time. Imagine the thousands of schools that could have been built, numerous hospitals with the best care and the strongest social safety nets that can help those most in need. The persistence of financial crimes will disproportionately impact the most vulnerable section of society. It erodes trust and leads to a breakdown in society. We in the financial sector have an instrumental role to play in this area. Our job involves the intermediation of money flows. We have the ability to prevent and facilitate investigations and prosecution of these crimes. In light of this, allow me to make three points on how we can achieve greater governance and transparency in the financial sector, which will reshape Malaysia’s future for the better. Shared responsibility to enhance compliance and prevention The first point that I would like to make is that combating financial crime is a shared responsibility. It is not the sole responsibility of central bank supervisors, financial intelligent units, banks or even the compliance function within financial institutions. Just as individuals, all of us have a collective responsibility to contribute to nation building, it is the responsibility of each player in the financial system, law enforcement agencies, prosecution agencies and the judiciary to look out for potential abuses, stamp out financial crimes and not let the perpetrators get away. For financial crimes do not occur in isolation.