GLOBAL regulators have introduced a slew of new rules that have made the financial system safer, simpler and fairer, but more needs to be done to make it more open and trustworthy, said Bank of England governor Mark Carney yesterday.

Mr Carney said at a lecture here organised by the Monetary Authority of Singapore that the process could involve changing the institutional culture in the financial sector and the way bankers are compensated.

He noted that trust between the public and the financial system has been severely tested by taxpayers' bailouts of big banks, hefty rewards for bankers that are perceived as undeserved and egregious examples of misconduct and market rigging.

Standards may need to be developed that would put non-bonus or fixed pay at risk so as to promote more responsible behaviour, he said.

"That could potentially be achieved through payment in instruments other than cash.

"(Federal Reserve Bank of New York president) Bill Dudley's recent proposal for certain staff to be paid partly in 'performance bonds' is worthy of investigation as a potentially elegant solution."

Mr Carney noted that Britain has introduced a remuneration code prescribing that payment of bonuses must be deferred for a minimum of three years and, after payment, be subject to clawback for up to seven years.

Bonuses can be reduced or taken back if evidence emerges of employee misconduct or failures of risk management.

But it is of no use if Britain acts alone as global cooperation in tackling this issue is vital, said Mr Carney, who was speaking at the Ritz-Carlton Millenia.

"In an international labour market, there is a particular role for international standards and coordination to ensure a level playing field," he added, lamenting that new European rules to cap bonuses to half of total pay have the undesirable side effect of limiting the scope for remuneration to be cut back.

Global solutions are also needed to rebuild trust in markets, Mr Carney said.

Just last week, he noted, British, American and Swiss regulators fined several banks US$3.3 billion (S$4.3 billion) for misconduct in foreign exchange markets that went on long after banks were fined for abusing inter-bank interest rate benchmarks.

"The repeated nature of these fines demonstrates that financial penalties alone are not sufficient to address the issues raised," he said.

"Principles of fair markets, codes of conduct for specific markets and even regulatory obligations can all help. There must be clear consequences, including professional ostracism, for failing to behave properly."

Just as important, Mr Carney added, is trust between regulators.

"Each regulator must trust others to implement agreed common standards. In this regard, Singapore is a world leader," he said.

"Trust can be sustained only if all countries follow the example of Singapore to implement standards consistently, fully and in a timely way."

Mr Carney noted that while future crises can never be ruled out, the steps taken to make banks safer and simpler have reduced the likely frequency and severity of future financial crises.

"That confidence is growing as we make the system safer. Consistent, full and timely implementation of global standards is necessary to continue to build the cross-border trust on which an integrated system can be founded," he said.

"The next phase of reform will give businesses and households the confidence that finance, far from being a threat to them, is here to serve them in their work to deliver prosperity."