The appreciation of regional currencies is not likely to eliminate these imbalances. In fact, excessive focus on the exchange rates as corrective mechanisms for these imbalances has led to speculative capital inflows into Asian economies. This has required policy makers to intervene to avoid a sharp appreciation of their currencies, thus accumulating large reserve holdings. Clearly, at best, exchange rates offer only a partial solution and excessive focus on this area could in fact be counter productive. It risks sharp movements in exchange rates which at the extreme would be highly destabilising to the global currency, capital and commodity markets. The long-term solution would be for the US to increase its savings and moderate its import demand and for the rest of the world to increase its demand and imports. Such a transformation will eventually occur but it is unlikely to occur overnight. In the transition there could be some economic dislocation. However, with its young workforce and with the growing productivity, competitive and dynamic economies, there is great potential for the Asian economies to become the growth dynamo for the region and the world. With rising income levels in regional economies, particularly among the growing middle income group in China, India and the ASEAN economies, there is potential for an intrinsic source of demand within the region. This rebalancing of demand across the world will eventually reduce the prevailing imbalances. In 2004, the Malaysian economy experienced strong growth. Going forward, the economy will continue to be well supported by both domestic and external demand.

I am confident that opportunities abound for Shanghai and Singapore to deepen collaboration on this front. I believe that BRI-related cooperation between both financial centres will become a distinguishing mark of the new Asian financial landscape ahead. (iii) Working Together on Future-Ready Initiatives in the area of Financial Technology (FinTech): Both Shanghai and Singapore recognise the vital importance of harnessing new financial technologies for sustainable growth of their financial sectors. This is a critical ingredient for future-ready international financial centres in Asia. Shanghai is already home to some of the largest FinTech firms in the world 21. It is proactively taking measures to achieve its vision of becoming a global centre of innovation, science and technology (IST), which will also bring synergies between the financial and IST sectors. Singapore, meanwhile, is committed to building a Smart Financial Centre where technology and digitisation is pervasive in the financial sector and beyond22. MAS has rolled out a range of initiatives with strong government support designed to grow and anchor a rich and diverse FinTech ecosystem in Singapore. There are now more than 200 FinTech start-ups in Singapore and a vast majority of them have opened in the past two years. According to a KPMG report in July, this was the fastest growth rate in Asia. In September, Singapore tied with London for pole position as a FinTech hub in a Deloitte report23. There is much that Shanghai and Singapore can work together on in terms of FinTech.