This analysis of policy frameworks would help to focus bilateral surveillance, and provide a better basis for multilateral surveillance, and for integrating the two. It should throw up issues that could be pursued either with individual members or broader groups as appropriate. An annual remit Better guidance for Fund surveillance should be buttressed by strengthened accountability for performance. For this, we need a clearer definition of what the Fund’s surveillance is expected to deliver. A good way of doing this would be to set an annual surveillance remit for the Fund’s Managing Director - an idea endorsed by the IMFC last April. There are a number of overlapping mechanisms for setting priorities and assessing performance which now operate across the broad range of the Fund’s work programme, through the Executive Board. But a surveillance remit would provide a sharper means for holding Fund management and staff to account for their performance on this key aspect of their work. Of course, it would need to work with the grain of the Fund’s overall governance arrangements. This throws up two tricky issues. First, who sets the remit and how? And second, how is the Fund’s performance to be evaluated, and by whom? These issues require detailed consideration, but let me offer a few thoughts.
The capitalist system depends on owners of capital to promote sustainable value creation through market discipline. Is it simply short-term profits that matter? Are there other social or environmental purposes that must be safeguarded? To this end, the Securities Commission’s Malaysian Code for Institutional Investors articulates the stewardship 3/5  BIS central bankers' speeches  role that shareholders ought to play. Ultimately, shareholders need to clarify that – we need more than just the bottom line – immediate profit is not everything. (b) Situation Let us move on to the second element – the “situation”. The system of values creates and maintains various situations. The situation represents the environment or immediate setting in which financial industry professionals operate. This is a broad subject. Today, I wish to focus on two types of situational incentives. Firstly, remuneration structures. And secondly, the attitudes toward speaking up. Remuneration plays a significant role in influencing behaviour, including ethical choices. Admittedly, the task of designing and implementing a remuneration system to encourage professionalism and integrity is not straightforward. However, the intuition is simple and attainable: financial institutions should avoid the folly of rewarding A, while hoping for B. In other words, we cannot hope for or expect ethical behaviour so long as we continue rewarding people for acting otherwise. In this regard, the Bank is currently phasing in requirements consistent with international standards to align remuneration with prudent risk-taking – with a focus on material risk takers.