Thank you, Mr. Chairman. I feel honored indeed to become the 4th speaker at the annual BP Lecture here at the British Museum.  My three predecessors -- Nelson Mandela, Mary Robinson and Amartya Sen, are all profoundly respected for their enormous contributions to the emancipation and well-being of humanity. To them, I wish to pay my highest tribute. By the same token, I want to thank British Museum for extending me the privilege to further their thoughts on global civilisation, a topic that concerns the development of humanity. I am making my best endeavours to live up to the expectations of my generous hosts and this truly distinguished audience.

It is always an inspiring, enriching and refreshing experience to visit the British Museum, a place that showcases the evolution of human civilisation through interaction and integration with each other across centuries. Driven by the economic, technological, cultural and social progress, such integration is gathering momentum year by year. We call this process GLOBALISATION. As we have ushered in the new millennium, like or dislike it, we are embracing a new era of globalisation, where the accelerated integration is increasingly showing its bearings on every country and every individual alike.

Since its infancy, globalisation has triggered a wide spectrum of feelings and comments. Among all schools of thoughts, however, there is a general recognition that we are living in the same global village with stronger interdependence and interaction than ever. Just like many other countries, China embraces the globalisation, for it is inevitable and irreversible. Meanwhile, it is not an easy task to ride on its opportunities and go through its challenges. It is true that most of time globalisation helps foster prosperity, peace and stability, for individual countries and for the world as a whole. However, it has raised new challenges and issues to the world civilization, to our long-standing tradition and entrenched mindset. For many economies and nationalities, globalisation does not automatically bring all the benefits and guarantee sustainability. In fact, at certain periods of time, globalisation, if mismanaged, can be disruptive and even disastrous to the course of civilization.

Today, I would like to squarely face this issue, an issue that has over and again posed challenges to human civilization.

The recent financial turmoil is increasingly sweeping from the U.S. to the rest of the world. Countless financial institutions are forced to the edge of bankruptcy. Countless people are suffering painful evaporation on their securities or other assets. The adjustment of property prices is running out of hand: it had once widened the spreads of risk-weighted assets worldwide, then it triggered global liquidity squeeze and credit crunch, which are now going wider and further into other sectors of the economy. Unfortunately, there has been no sign of when and where the crisis will be stopped. The situation is getting worse, as the central banks rush to inject liquidity to the market, a move that is sadly giving rise to moral hazards and is thus forming a harder blow to the real economy. As we see in U.S., UK and Europe, inflation is picking up and economy is slowing down or staggering. Currency goes volatile and unemployment is spreading out. Consequently, the growing fears and unrests are looming large over the human society. It is of no doubt that such turmoil is counteracting the course of global civilization.

In fact, I'm not surprising if we look into how the sub-prime loans are made by American mortgage lenders, how such mortgage loans are then packaged and securitized by the investment intermediaries, and how the whole process has given rise to huge conflicts of interest. And neither I am surprising if we look into how the regulators view and respond to such so-called innovations. It is indeed a big mishap for human beings to face at the outset of the new millennium.

Having said that, I do not mean I am against business and money-making. My questions are: does money-making or doing business justify us in exposing our business and economy to excessive risks? Does money-making or doing business justify us in packaging products that we don't fully understand and then selling them to public investors who understand even much less and who are much more vulnerable to the associated risks? Does money-making or doing business justify us in ignoring the quality of information and of its communication, and in neglecting disclosure obligation and social responsibilities? Does money-making or doing business justify the regulators in ignoring their duty for prudential supervision and their job to stop the misbehavior? Last but not the least, does money-making or doing business justify us in turning a deaf ear to the calls for cross-country cooperation just to protect the special interests of those highly leveraged financial players of a particular country?

Today, I want to make a call upon the corporate groups to build their corporate culture and shoulder their global responsibility.

Today, I want to make a call upon my counterpart regulators to act promptly and responsibly.

Today, I want to make a call for quick and coordinated actions to address cross-country challenges.

Nothing is more important than the above to resolve the crisis.

In developing a longer-term response, we should be guided by three principles to rebuild our global civilisation along the process of globalisation.

First, accountability and responsibility for managing risks are and must remain with individual financial institutions and investors;

Second, this need to be firmly backed up by strengthened national regulatory and supervisory frameworks;

Third, regulatory authorities in different countries need to work closely together and exchange quality information efficiently and effectively, both within the region and internationally, to prevent and manage the crisis and its contagion.

To this end, I am calling for the improvements in financial firms' senior management responsibilities for and accountability to the society. Imbedded within these responsibilities is the task of determining in which business the firm is to engage and to what degree, and hence the kinds and levels of risks the firm is to accept. The responsibilities necessarily include the task of creating a team to include people with expertise in a range of risks and with the authorities and willingness to discuss all significant risk exposures across the firm. The responsibilities necessarily include a balance that each firm's senior management achieve between its desire to do business, to make money and its social duty for developing or enforcing controls on the resulting risks, for identifying, understanding risks and acting on that understanding in order to mitigate excessive risks. The responsibilities necessarily include a fair compensation package and other incentives to achieve the balance I mentioned above, a balance between short-term performance and longer-term gain, and between individual or local business unit performance goals and firm-wide objectives. A sheer performance-driven compensation and incentive package will highly likely cause greedy and irresponsible actions as well as delay or distort the flow of information up the management chain of the whole firm, not to mention the information disclosed to the public.

To this end, I am also calling for improvements in supervisory and regulatory response. I call upon supervisors and the major audit firms to deliver clear and consistent guidance on valuation and disclosure of such risks, to work together to set up early warning system on financial stability through regular reporting and improved information exchange mechanism.

Talking about effective supervision, what we need and persist in is stronger risk-based supervision of cross-border groups and their activities, common practical guidelines or principles for use in cross-border crisis prevention and resolution, common yardsticks and analytical framework for identifying and measuring the systemic implications of a potential crisis, closer cooperation between countries, between the market and themselves.

As a banking regulator, I feel an imperative call for such closer partnership among financial regulators of all countries. Cooperation and exchanges among regulators will not only promote the financial prosperity and stability, a cornerstone of our mission, but also safeguard the world civilisation in a larger sense. Please let us join hands to stride towards a more prosperous civilisation.

Having said that, I am for market solutions. Market oriented solutions are crucial to achieving the necessary improvements in business operations and in effective interactions between market participants. However, whenever market participants prove unable or unwilling to rapidly address the issues to calm down public fear and social panic, whenever we must rebuild confidence and increase the transparency to sustain our world civilisation, we as the regulators should stand ready to consider our duties, to consider regulatory alternatives in order to put everything back on the right track.

Ladies and gentleman, people have short memories, I am sorry to say. Generations change on the trading floors and in the corner offices, and, before you have totally forgotten your memories, if any, a new bubble is being enthusiastically inflated. So, to survive and prosper, we've got to be alert enough, -- alert enough in fighting against our short memories. Of all the weapons we could use, this is the most important one and the most powerful one -- the civilisation.

Let's work hand in hand to protect and cultivate the civilisation of the mankind.

Thank you!

(Conclusion remarks after Q&A)

Finally, I want to conclude by saying that the year of 2008 is a special year for China. This year marks the 30th anniversary of China's reform and opening-up. And in four years we will celebrate the 30th Olympic Games after we hand over the Olympic torch to the British people this summer. So I wish to take this opportunity to invite you to China for the Olympics and to share our civilisation.

Thank you!