  Second, resolution frameworks have to be established, to ensure that all banks, however complex or large, can be resolved in an efficient and safe manner. Such frameworks may involve the simplification of firm structures and the design of “bailin” mechanisms, where creditors are forced to absorb losses when a bank is close to failure2.   Third, G-SIFIs will face more intensive supervisory oversight, guided by an enhanced set of core principles for effective banking supervision. Singapore’s regulatory approach Many jurisdictions are now considering their responses to the FSB and Basel Committee recommendations. MAS’ regulatory approach is guided by three principles: (i)  First, we must maintain the high standards of financial regulation which have become associated with Singapore. Maintaining high regulatory standards is completely compatible with fostering a vibrant financial sector. Being a wellregulated, trusted and stable financial centre is a source of advantage for Singapore. It provides confidence for banks to operate in Singapore and for customers to transact with banks here. 2  “Bail-in” is the process where bank debt in failing firms is forcibly converted into equity. This is intended to make it possible to rapidly recapitalise a bank such that it can continue in business without an equity injection from taxpayers. 2  BIS central bankers’ speeches  (ii)  Second, our rules must be risk-appropriate. International standards must sometimes be enhanced to be appropriate for Singapore’s context. They must be targeted to address well-defined risks or concerns that could have systemic implications.
The conduct of monetary policy in Norway, as in many other countries, is delegated to the central bank with an objective of low and stable inflation. The inflation target can be seen as an answer to the problems raised by Kydland and Prescott. However, inflation targeting probably places greater demands on our understanding of the way the economy functions than earlier. Macroeconomic models are useful tools that can combine our empirical and theoretical insights. But models cannot provide definitive answers to all the questions that we as decision-makers face on a daily basis. Nor can they reduce the uncertainty surrounding economic developments. Therefore, it is necessary to analyse the economy from different angles. We must also look out the window, we must be pragmatic and we must exercise discretion. BIS Review 4/2005  7