The effective channelling of Asia’s large pool of savings into such productive investment activity in the region will certainly support more rapid growth and development in Asia. Economic and financial linkages are also being established with other emerging economies in other parts of the world thereby mutually reinforcing the prospects for growth in the global economy. This will in turn contribute towards the rebalancing of global growth. The concentration of economic power in the global economy will become more dispersed. International regulatory reforms Let me now turn to the issue of financial regulatory reform. The enormous scale, scope and costs of the global financial crisis has led governments, and regulatory and supervisory authorities from around the world to mount one of the most aggressive agendas of reform to financial regulation seen in recent times. The extent of these reforms has been almost as dramatic as the events that led to their creation. In particular, the potential impact that these reforms will have in re-defining the financial landscape in the future are significant, with broader implications for competition, innovation and ultimately, on the overall economic activity. Certainly, strengthening financial regulation is an important goal. And the need to improve the design of financial regulation is not a point of contention. For many emerging economies – certainly in Asia – strengthening financial regulation and supervision and the development of the financial system has been an important priority, particularly in this recent decade and well before the onset of this crisis.

The emerging economies, in general, and the Asian region in particular, have emerged with stronger growth. Several key factors have enabled this faster and stronger rebound. Firstly, is the policy flexibility to implement the monetary and fiscal stimulus. Strong fiscal positions and relatively low public debt levels have allowed many Asian governments to implement larger fiscal stimulus measures. Second, the financial sector in the region is in good shape, avoiding any disruption of credit flows to the private sector. The region has benefited from the decade long of financial reforms and development of the domestic financial infrastructure. The financial systems in Asia have remained resilient throughout this global financial turmoil. This will be an important factor in sustaining the economic recovery to support domestic private sector economic activity when the fiscal measures are gradually withdrawn. Third, households and the corporate sectors are not over-leveraged, and thus better positioned to sustain consumption and investment activity. Fourth, increased intra-regional trade in Asia  BIS Review 24/2010  1  has supported the recovery in regional trade activity. This has been reinforced by the strengthening of the domestic demand in the region. While domestic sources of growth have gained significance, trade will continue to be important but with a distinct change in the pattern of trade. Trade among the emerging economies has already increased, with this trend being most evident among the emerging economies in Asia. Intra-regional trade in Asia has already risen from 32% of total exports in 1995 to an average of 50% in 2008.