Table of Contents
Summary of Main Themes ...................................................................... 9
Reform Principles ........................................................................................ 9
Exit Strategy Principles ............................................................................. 10
I. Introduction ......................................................................................... 13
Where are we in dealing with the crisis? .................................................. 20
Requirements of reform and exit from extraordinary policies ................... 20
Exit strategies need to be broadly consistent with longer-run
economic goals. ........................................................................................ 23
Notes ......................................................................................................... 23
II. Priorities for Reforming Incentives in Financial Markets ............. 25
A. Lessons from past experience .............................................................. 27
B. Strengthen the regulatory framework ................................................... 29
C. Focus on integrity and transparency in financial markets .................... 36
D. Strengthen capital adequacy rules ....................................................... 41
E. Strengthen understanding of how tax policies affect the soundness
of financial markets ............................................................................ 45
F. Ensure accountability to owners whose capital is at risk ................... 51
G. Corporate structures for complex financial firms ................................ 57
H. Strengthening financial education programmes
and consumer protection .................................................................... 64
Notes ......................................................................................................... 65
III. Phasing Out Emergency Measures ................................................ 71
A. The timeline for phasing out emergency measures ........................... 73
B. Rollback measures in the financial sector .......................................... 77
C. Fostering corporate structures for stability and competition .............. 83
D. Strengthening corporate governance ................................................. 86
E. Privatising recapitalised banks ............................................................. 88
F. Getting privatisation right ...................................................................... 89
G. Maximising recovery from bad assets .................................................. 91
H. Reinforcing pension arrangements ...................................................... 92
Notes ......................................................................................................... 98