Finally, and perhaps the factor most specific to this region, we have seen a remarkable de-leveraging of Asia at a macro level. Nowhere is this better illustrated than Korea, which arguably defaulted around Christmas two years ago and is now a new external creditor. The region is generating dollars and paying off foreign debt. Before looking ahead to 2000, let me conclude my review of 1999 by looking under the macro changes to see how the financial markets have been adjusting at a micro level. This is best reviewed by looking at what has been happening to the region's banks.
Banks remain central to intermediating savings and investment flows in Asia.
Local capital markets may be developing, but there remain many constraints, not least the limited local institutional investor base. Banks remain central to Asian financial markets. Generalising heroically, but I think fairly, Asian banks in 1999 have become less distressed and more transparent. NPLs appeared to have peaked around the region. While reserves and capital still need replenishing, the task appears less daunting than a year ago.