In both cases, there were harsh criticisms by the international community, which deemed the measures as undermining the benefits of free markets. Fast forward to 2008, a generalized downward spiral in asset prices and abrupt market seizures were contained by extraordinary interventions of major central banks, particularly the Federal Reserve. The interventions were far reaching, ranging from loans to banks and non-banks to direct support of private securities, such as commercial paper and mortgagebacked securities. In effect, central banks became market makers in some segments of the market. These interventions were widely applauded. What a difference a decade makes! In the wake of the global financial crisis, an emerging consensus is that market interventions in certain circumstances are justified. No more is this evident than with respect to the use of capital flow measures, or CFMs. It is now generally accepted that CFMs targeted at tilting the composition of inflows away from debt, especially short-term ones, can be beneficial. More generally, macroprudential measures have become an important part of policymakers toolkit, with increasing theoretical support for their use in a counter-cyclical manner. A similar reassessment has occurred with respect to foreign currency intervention, which is increasingly being recognized as a useful and justifiable complementary tool. Also, the large accumulation of foreign reserves that was once criticized is now credited with helping to mitigate the impact of the global financial crisis on emerging market countries. Thus much of what Asia was doing before on the fringe, so to speak, have now become mainstream.

And Singapore’s CapitaLand and the Middle Eastern-owned Arcapital Bank have recently set up a property fund aimed at investing in Japanese real estate, with a target asset size of $ 300 million. 2  BIS Review 47/2005  Second, similarly for the banking sector. I expect to see more Middle East banks and financial institutions set up in Singapore and Asia going forward, and a counter-flow into the Middle East over time. Some Middle East banks are already planning to scale up their presence in Singapore to service Middle Eastern entities interested to operate in Asia, as well as to help Asian corporates to operate in the Middle East. There are similar plans by Singapore-based financial institutions to step up their profile in the Middle East as they seek to tap into Middle Eastern financial flows. Such plans may give added impetus as Singapore concludes FTAs with more Middle Eastern countries, including those which are currently ongoing with Qatar and Kuwait. Third, Islamic finance is an area that shows considerable promise globally. We know the size of the market - around $ 200 to $ 300 billion globally, and growing at about 15% per annum. Efforts are being made in Asian markets, to grow Islamic financial services. For example, Malaysia has been awarding Islamic banking licences to foreign players and encouraging the subsidiarisation of Islamic banking windows. It aims to have 20% of total banking assets to be Islamic by 2010. Singapore, as an international financial centre, is also keen to offer Islamic financial services.