On top of these, I think there is a need to consider the introduction of market-based mechanisms for credit enhancement or guarantees. In Asia, I am aware of problems encountered by private sector initiatives in this field. It has proved difficult objectively to assess and manage the risks involved in such operations. Indeed, one feature of the recent explosion of international finance is market volatility that has been much higher than had been thought possible in the light of historical experience. What, for example, the Bank and the Miyazawa Plan have achieved in the provision of credit guarantees to several sovereign bond issues after the outbreak of the financial crisis could also be achieved and expanded through market based arrangements.
Credit enhancement is quite common in the developed markets.
The availability and use of credit enhancement facilities have become a basic ingredient of mature bond markets. It will be useful to examine how this could be promoted in the region. This promises to give a much-needed boost to the development of the bond market in the region. Let me end by expressing confidence that the Bank, under your leadership, will be able to play a more pivotal role in the development of Asia as it steps into a new era in which technology presents an abundance of opportunities as well as risks.