More should also be done to promote the participation of domestic long-term investors such as insurance companies and pension fund into the region. Through these measures the intention to recycle Asian savings and surplus funds for the productive use of the region would be realised. Malaysia has taken several steps to develop its market to facilitate cross border investment activities. Over the years, we have liberalized foreign exchange administration rules to make it easier for domestic investors to invest abroad and for foreign investors to invest in Ringgit assets. With this progressive liberalization, ASEAN investors can now buy Ringgit assets from the region or any part of the world. Together with the Malaysian Securities Commission, we have introduced a transparent and facilitative framework for the issuance and subscription of ringgit and foreign-currency denominated Sukuk and bonds in Malaysia. Our efforts have resulted in a growing trend of regional issuers participating in our domestic market. A leading Indonesian oil palm plantation company was the most recent issuer in Malaysian domestic bond market, issuing MYR500 million Islamic securities, its second securities issuances. Other Asian issuers that have tapped the Malaysian domestic bond market include two other Indonesia’s palm oil plantation companies, a Hong Kong based global supply chain company, Korean banks and corporations. As at September 2014, the total issuances by non-residents, including ASEAN issuers, amounted to 58 issuances. This accounts to a total of MYR20.5 billion (USD6.5 billion equivalent). We are a firm believer in cooperation between financial markets.

The third question is whether OMTs are a form of quantitative easing (QE). The answer is: no. First of all, QE is meant to ease the general credit conditions which are considered by the central bank to have become tight in a situation in which the short-term interest rate cannot be reduced further. OMTs are meant instead to restore homogeneous credit conditions throughout the euro area, but not necessarily to ease credit conditions in the aggregate. In the euro area as a region, there are currently no clear signs of deflation fears (see slide 11) that would justify QE. In addition, the channels of transmission are different. QE is expected to act on risk premia (primarily term premia) by subtracting long-duration securities from the market and replacing them with base money, which has a very short duration. This would reduce term premia and bid up the price of long-dated securities. The aim of OMTs however is not to create an excess demand for duration in the market, but to counteract redenomination risk and squeeze redenomination premia out of bond prices. In fact, OMTs focus on relatively short maturities, where premia associated with break-up risk are most evident. Finally, QE would need to be tailored to the specificities of the euro area, where two-thirds of the external financing of non-financial corporations is extended by banks and which does not have access to actively traded credit markets. Conclusions Let me conclude. The effectiveness of monetary policy relies on the control of monetary and credit conditions.