As part of the improved disclosure of policies and intentions, timely and comprehensive dissemination of the public sector’s balance sheet and income statement clearly is necessary if market turbulence is to be reduced. Such disclosure helps identify pressures or problems that might otherwise be allowed to fester. For example, more timely, continuous and comprehensive release of data on foreign exchange reserves may encourage earlier and appropriate policy action in the face of large-scale speculative pressures. Transparency is most effective when it is an established element in a clearly articulated, goal-oriented process. Sensitivity to the changing needs of the marketplace for information - both statistical and qualitative - can be developed only through an ongoing dialogue with market participants. Experience suggests that in today’s 24-hour trading environment with instantaneous access to information everywhere, authorities are well-advised to speed up their disclosure and explanation of their actions and intentions. Conclusion In closing, the recovery in Asia, and particularly Korea, is remarkable indeed, and owes much to the energy and hard work of its people, enlightened political leadership, and the substantial and focused efforts of policymakers to implement sound macroeconomic and financial policy. But the recovery is not yet complete and much remains to be done. Moreover, the rapidity and severity of the developments of the last several years, indicative of the transformation of the international financial landscape, underscore the importance to crisis prevention of ongoing vigilance and robust institutional structures, and the awareness that we can never let our guard down.
I have a background in resolving banks, and I regard having the capacity to resolve failed large banks – including the largest – as the Holy Grail of resolution. Unlike the legendary Holy Grail, I think there is a good reason to believe that the objective of being able to resolve large banks that fail can be within our grasp. But the challenge of resolving PRA-regulated firms goes beyond banks. Insurers raise exactly the same issue of continuity of provision of critical financial services. Moreover, in a line of business such as with-profits life, the business model involves pooling many vintages of long-term contracts in a single fund for the benefit of policyholders. A typical resolution involves run-off over a long period, which remains a sensible approach. But the public policy interest is reasonably directed towards ensuring a process of resolution, which is fair to those various vintages and more broadly which allows more rapid payout to policyholders, since the current arrangements can involve long delays and pressure for policyholders to accept lower payouts in return for greater speed. This is a different, but nonetheless important, public policy interest in orderly resolution. I am very clear that when firms mess up, they should be allowed to fail, and by doing so they are putting at risk the money of their shareholders and if necessary after that, those who provide debt funding according to levels of seniority.