Dear colleagues, •  Before proceeding with the presentations and discussions today, let me share a few words on the experience of the BNB which provides examples, relevant for the topic of today’s conference. •  We have seen that the compatibility of monetary, micro- and macro-prudential policies is possible in reality, and not only in theory. The BNB has successfully implemented such a policy mix for many years, during all stages of the economic cycles, before and during the recent global crisis. •  We have also seen that it may take years and perhaps at least one serious financial or banking crisis, to design and then enforce central banking policies which are optimal for a country. In Bulgaria the policymakers, legislators and the public at large came to the consensus of introducing the currency board regime and the very strict banking supervision and regulations. This happened only after our own deep financial and banking crisis which took place in the mid-1990s. Our experience has convinced us that there are no universally superior or “one-size-fits-all” frameworks. Neither in the areas of monetary policy and banking supervision, nor in the design of regulatory structures or the governance of central banks. Alongside the processes of financial integration and global regulations and practices, which are inevitable, we believe that countries should be allowed to retain sufficient levels of flexibility to apply countryspecific solutions.
With the current practices that are available worldwide which can hide the identities of true owners, it is now almost impossible for regulators to only rely on ownership limits to deal with undue influence, or be assured that seemingly unrelated parties are not actually related! Consequently, markets are increasingly looking towards the application of good Corporate Governance practice to overcome any ill-effects that may arise out of ownership concentration and it is generally believed that if good governance is in place, concentrated ownership, known or unknown, may not adversely affect the risk management process of the institution. In the case of banks especially, regulatory limits on ownership in banks are prescribed in a number of countries to prevent banks from being controlled by a single owner or a group of connected owners. However, a majority of countries in the world still do not have such regulations. In fact, according to a World Bank survey of 157 countries in 2003, 112 did not have regulations on ownership limits. Nevertheless, in many countries, indirect regulations such as limits on related-party transactions and fit and proper tests for bank directors and executive officers are in place to promote this aspect of good Corporate Governance, and I think, regulators genuinely believe that such practices would increasingly ensure the better risk management of banks, thereby leading to a more sound system.