In addition, the general public too is kept informed of matters relating to consolidation through regular press communiqués to ensure maintaining the transparency of such policy measures as well as the public confidence. BIS central bankers’ speeches  9  Meanwhile, the Technical Assistance Team is entrusted with several duties including evaluating the consolidation proposals, studying and recommending solutions on technical aspects, particularly on legal, accounting, banking and tax, formulating guidelines to facilitate the consolidation process and arranging funding through the “Sri Lanka Deposit Insurance and Liquidity Support Scheme” (SLDILSS). The service of this internal Technical Assistance Team is highly rewarding, since, if such assignments were to have been outsourced, it would have taken a longer time period in addition to having to incur exorbitant consultancy fees. Step 3: Preparing the master plan for financial sector consolidation The Master Plan on the financial sector consolidation was prepared by the Consolidation Unit with the objective of developing a strong banking and NBFI sector with enhanced resilience to internal and external shocks in order to cater to the growing demands of the economy. Let me now explain the key components of the Master Plan. First: Institution-wise strategies We have designed a comprehensive strategy for the banks and NBFIs to transform their institutions to cater to the future needs while maintaining the stability of the system. Under this broader strategy, we have sector-specific strategies, designed separately for state banks, other domestic private sector banks, foreign banks and NBFIs.
Basis 4: Transition of the burden of financial crises from shareholder to tax payer Ladies and gentlemen, the history of global financial crises taught us that nature of crises have been changing and along with that the burden of such crises have shifted from shareholders to tax payers. The history of systemic financial sector crises dates back to the 18th century, to the banking sector crisis named as the South Sea Crisis in UK in 1720s. After the inception of the formal banking system, USA has reported a series of crises in their banking system from 1792 to the latest, the Subprime Crisis in 2008. During initial periods, the impact of these crises was local and their spillover effects were negligible. With the evolution of the global banking business, banks have gradually started to link with the other banks in tandem with the improvements in global trade and capital market developments. With this interconnectedness, a crisis in one particular bank or banks in a particular country began to spread and create crises in the regional and global financial markets. The first ever global financial crisis erupted in 1857 in the US. However, until the world’s biggest slump, the Great Depression during 1929–33, Governments wanted financial systems to become stable by themselves, while the Governments’ involvement with banks was limited to raising funds from banks for developing infrastructure and other public spending. There was no lender of last resort to look after the crisis-ridden financial institutions.