It will be examined further at a meeting in Hong Kong next week. Despite generally strong economic fundamentals, high savings and prudent fiscal policy among its economies, Asia traditionally invests most of its savings outside the region, mainly in OECD markets.
Funds flow back to Asia in the form of foreign direct investment and portfolio investment.
These inflows are footloose and can reverse quite easily. Currency turmoil is not unique to Asia. What Asia lacks, and Europe and the U.S. have, is a deep, liquid and mature debt market where three things can occur. First, governments and corporations can borrow long to invest long, thus eliminating the maturity mismatch inherent in Asia. Third, finance ministers in Asian economies can foster a vibrant debt market with adequate risk management by investing their reserves in Asia.