The purpose of these meetings is to enable the HKMA to get to know the future directors and chief executives better and to make clear the HKMA’s expectations of the roles and responsibilities their appointments will entail. It is important for all of us to appreciate that the ultimate responsibility for ensuring the safety and proper functioning of a financial institution rests with the institution itself. Regulation and supervision can only supplement or reinforce the process and cannot replace sound control and governance within the institution. (c)  Culture: the latest Global Financial Crisis and the subsequent developments have exposed clearly the fact that uncontrolled greed can and did generate highly undesirable outcomes. Not only were financial firms badly hit by these outcomes, but in some instances the reputation or brand of well-established financial centres has also been tarnished by these events. Of course, after the events many people sought to apportion blame. Obviously, the institutions concerned must take the bulk of the blame. Inadequate regulation and poor supervision were also culprits. But to me there is a much more fundamental issue that needs to be tackled if we wish to reduce the risk of similar events recurring. That is the culture and values of the financial firms and the market practitioners.
In Italy, the recent pension reform which approves the full transition to a contribution system completes the necessary correction of the pension spending dynamics which was started years ago. As Germany shows very well, large and effective welfare systems can be made more efficient without compromising social goals. We are living at a critical juncture in the history of the Union. The sovereign debt crisis has exposed serious weaknesses in the institutional framework; in this context, the difficulties in finding common solutions are having a negative impact on market valuations. The extraordinary measures taken by the ECB have gained us time; they have preserved the functioning of monetary policy. 2  BIS central bankers’ speeches  But we have now reached a point where European integration, in order to survive, needs a bold leap of political imagination. It is in this sense that I have referred to the need for a “growth compact” alongside the well-known “fiscal compact”. A growth compact rests on three pillars and the most important one, from a structural viewpoint, is political: the economic and financial crisis has challenged the myopic belief that monetary union could remain just that, and not evolve into something closer, more binding, into an arrangement whereby national sovereignty on economic policy is replaced by the Community ruling.