Speeches and Remarks

Remarks by Ambassador James F. Moriarty on Dhaka Stock Exchange Visit 

Tuesday, November, 2009           

Mr. Md. Rakibur Rahman, Dhaka Stock Exchange President;
Mr. Saiful Islam, Senior Vice-President; and
Mr. Md. Shakil Rizvi, Vice-President.
Thank you very much for inviting me to visit the Dhaka Stock Exchange today.  It is a pleasure to be here to highlight the vital role capital markets can play in growing an economy.  Just as banks bring together savers and borrowers, so too can well-run stock exchanges serve as financial intermediaries.

Capital markets are an important component of any nation’s financial system.  A diversified financial system, that provides a variety of savings and investment instruments, spreads risk and helps maintain stability.

Simply spreading risk is not enough to protect a financial system, however.  Properly implemented regulations and transparent operations are critical to maintaining a healthy, functioning financial system.  The collapse of financial institutions in the United States and around the globe over the last year dramatically illustrated the risks of insufficient oversight, which encouraged in some cases corrupt and illegal practices.  The financial meltdown quickly spread to the broader economy.

Over the past year, America has faced the worst financial crisis since the Great Depression, leaving millions of Americans struggling with unemployment, businesses failing, home prices falling, and savings plummeting.  The U.S. Government has channeled billions of dollars in monetary and fiscal stimulus to keep the economy of America, and the world, from grinding to a halt.

But stimulus alone is not enough.  We also are taking steps to prevent a crisis of this magnitude from happening again.  President Obama and his advisers have developed a plan that will strengthen government oversight of the financial sector.  Financial regulatory reform represents a common sense change in the way the U.S. Government interacts with both Wall Street and Main Street.  The on-going reforms seek to restore responsibility and accountability to our financial system.  The reforms seek to provide Americans, and the world, with the confidence that there is a system in a place that works for and protects consumers, savers and investors.

Financial regulatory reform in the United States will close loopholes, impose tough new rules and guarantee greater transparency from investment advisors, brokers and fund managers.  We will strengthen oversight and aggressively pursue financial fraud, conflicts of interest and manipulation of the system that benefits special interests at the expense of families and individual investors.  We will also put in place tough new capital requirements, rigorous standards and supervision to make sure no financial institution is capable of bringing down the economy.

Here, Bangladesh’s financial sector was largely insulated from the global financial crisis.  Bangladesh still must guard against threats to its capital markets, however.  All markets need independent and transparent regulatory oversight to help investors minimize risk.  A lack of independent regulators or an opaque system of rules means capital markets are vulnerable to manipulation, corruption and collapse.  All nations need fair and transparent oversight of financial markets that safeguards the interests of savers and investors, particularly individuals and small investors.

A transparent and equitably-applied system of rules helps ensure confidence in markets.  And confidence is the lynch-pin of market structures.  When people lose confidence, markets crash, individuals lose their savings and businesses lose their investments.  I urge Bangladesh, including the Dhaka Stock Exchange, to implement clear and fair financial rules that allow shareholders to maximize benefits and minimize risks.  Investors have more confidence in markets that apply regulations equitably and clearly and that protect against corruption and manipulation.  Confident investors attract more savers and investors, which in turn leads to healthy, stable markets.

I look forward to following the continued growth of the Dhaka Stock Exchange and Bangladesh’s financial sector.  A strong, healthy, growing financial system leads to a strong, healthy, growing economy.  Capital markets are yet another tool for Bangladesh to use as it builds an economy that raises incomes, alleviates poverty and moves the country ahead.

I am delighted to be here at the Dhaka Stock Exchange.  I look forward to the Exchange helping drive growth in Bangladesh in the coming years.

Thank you.