In the UK, regulatory reporting was introduced in 1974. Returns could have around 150 entries. In the Bank of England archives is a memo to George Blunden, who was to become Deputy Governor, on these proposed regulatory returns. Blunden’s handwritten comment reads: “I confess that I fear we are in danger of becoming excessively complicated and that if so we may miss the wood from the trees”. 12 Today, UK banks are required to fill in more than 7,500 separate cells of data – a fifty-fold rise. Forthcoming European legislation will cause a further multiplication. Banks across Europe could in future be required to fill in 30–50,000 data cells spread across 60 different regulatory forms. There will be less risk of regulators missing the wood from the trees, but only because most will have needed to be chopped down. In the US, regulatory reporting has a history going back to the early 19th century. Nationally-chartered banks began to submit quarterly returns after the formation of the OCC in 1863. In 1869, following a legislative amendment, these became “call reports”, so named because banks were asked to report on surprise dates to prevent window-dressing. The Federal Reserve Act of 1913 required all state-chartered member banks to file reports with the OCC and in 1917 responsibility for collecting these passed to the Federal Reserve. By 1930, these reports might contain around 80 entries. Today, regulatory reporting is on an altogether different scale. Since 1978, the Federal Reserve has required quarterly reporting by bank holding companies.

Specifically, the US and Europe, the two largest markets for Asia’s exports, are still facing steep challenges in the adjustment process and the situation is still rather fluid. For the US, the rather sticky structural constraints such as high unemployment and depressed housing markets suggest that self-sustainable growth momentum remains uncertain when policy supports are withdrawn. In the case of Europe, while some progress has been made in resolving the sovereign debt issue, risks remain on whether certain economies can overcome the challenge without substantial debt restructuring. Looking ahead, external demand from these two markets is likely to remain subdued in the near future. Meanwhile, closer to home, the disastrous earthquake and the ensuing nuclear crisis hitting Japan, a key importer and exporter for many economies in the region, is adding further downside risk to export and production growth in the region. Last but not least, political instability in the Middle East and North Africa (MENA) region will likely keep oil prices elevated for some time. This in turn would drag on global economic growth, add upward pressures on inflation and heighten volatilities in the global financial markets. 4. All these complications are making life difficult for policy makers in the region. While Asia, having learned well the lessons from the Asian financial crisis, has managed to get through the recent global crisis relatively unscathed, we are now entering uncharted waters, and there are both imminent and longer-term policy challenges. 5. First and foremost, it is challenging to manage the large capital flows.