Their challenge is to evolve into modern corporations that are more than family companies. They need to be run professionally by the best man for the job, and not by heirs who may or may not have inherited the business skills and acumen of the founder. Third, governments need to untangle the complicated and deeply-entrenched ties between state, banks and industry, which exist in many Asian countries, like the chaebols in South Korea, or the state-owned enterprises in China. Such industries and enterprises often account for a significant share of GDP, but they are neither subject to market discipline, nor driven purely by economic considerations. They often find it difficult to operate as efficiently as private sector firms. Banks fail to apply normal criteria in approving loans, because of political pressure or implicit state guarantees. Employees enjoy de facto life-time job security. Well-connected persons help themselves to privileges at the companies’ expense. And governments find it politically impossible to close down the operations, no matter how unsuccessful. It is essential to speed up restructuring and reforming these unproductive enterprises. In China, the government is making a massive effort to reform its SOEs. In South Korea President Kim Dae Jung is pushing chaebols to rationalise and consolidate, and change their traditional ways of doing business. ASEAN countries must not lag behind, or else it will affect confidence in their investment climate. Banking sector reforms Besides pursuing corporate restructuring, ASEAN economies must persevere to clean up and recapitalise unsound banks, and strengthen the banking sector.

While the regulatory and legal barriers have proved to be thorny issues, I expect that the Commission, as part of its capital markets union (CMU) action plan, will not be dissuaded from its efforts.2  Integration of securities issuance With T2S, the Eurosystem has created the basis for an efficient and effective settlement 1/3  BIS central bankers' speeches  mechanism for securities in Europe. At the same time, by adopting the CSD Regulation (CSDR), the Commission has contributed to further harmonisation of the CSDs’ regulatory framework. However, to be able to reap the benefits of these efforts, market participants and corporates need to have full and direct access to the entire EU securities market at a low and harmonised cost. A European securities market should offer the possibility of issuing, settling and holding securities in the same way, regardless of where issuers and investors are located. A fully harmonised system of securities issuance could reduce the transaction costs for capital financing, make the European securities market more attractive in the global economy, and allow an effective redistribution of private risk across the EU markets. A sound and uniform panEuropean securities issuance mechanism would also be conducive to the creation of the CMU. Despite efforts to overcome the fragmentation of the securities market by providing a level playing field, there is still too little evidence of competition. The effects of competition have not been felt in terms of an actual geographical widening of services provided by the vast majority of issuers.