Problems with the global financial safety net  Hume himself recognised that the nature of sovereign flows created an incentive to insure against a sudden stop, lamenting: “There still prevails, even in nations well acquainted with commerce…a fear, that all their gold and silver may be leaving them 7.” There are different ways for countries to insure against the risk of sudden stops in capital flows: (i) individually through the stockpiling of foreign exchange reserves, (ii) via collective arrangements with other countries, for example regional reserve pooling or swap arrangements or (iii) through the International Monetary Fund (IMF). This multi-layered global safety net has some advantages but it seems to me that the current configuration is suboptimal: it is fragile, costly and fragmented. Fragile The aggregate size of the global financial safety net had been in decline before of the financial crisis, despite rapid reserve accumulation. There has been some recovery since then, as the size of the IMF and Regional Financial Arrangements increased in response to the crisis and central bank swap agreements were put in place. But the composition of the global financial safety net is now more fragmented [Chart 1] and it is unclear whether it would be sufficient during a systemic crisis. The IMF element is fragile, with borrowed resources accounting for an unprecedented three-quarters, around $ billion of which are temporary loans due to start rolling off next year with no agreement in place to extend them [Chart 2]. 7  See Hume (1758).

From its inception, Malaysia’s and its founding members’ vision have always been for a strong and integrated ASEAN region. The “ASEAN Way” believes there is strength in diversity and no country should be left behind. ASEAN strongly believes in the concept of shared prosperity, where wealth creation within the region will be enjoyed by all. The spirit of cooperation and flexibility are amongst the principles which underpinned the success of Myanmar’s chairmanship of ASEAN in 2014. Under Myanmar’s leadership, we saw major strides in financial integration that culminated in the conclusion of the ASEAN Banking Integration Framework (ABIF) by the ASEAN Central Bank Governors. A framework of gargantuan achievement. Myanmar’s leadership in seeing this through was crucial and now ABIF represents the single most important agreement in strengthening the ASEAN banking system, driving deeper integration and enhancing the region’s growth potential. It is an agreement of momentous significance. I would also like to congratulate Myanmar for successfully advancing the Yangon Outcomes for Financial Inclusion during their tenure as Chair in 2014. The groundwork that Myanmar laid during their Chairmanship was key to the announcement by the Finance Ministers and Central Bank Governors in March 2015 that financial inclusion will be elevated to be an important policy priority for ASEAN. This has resulted in the establishment of a dedicated working committee in ASEAN to deliberate policy options, engage stakeholders and coordinate collective actions to advance financial inclusion. Malaysia also places a big priority on financial inclusion.