Ladies and Gentlemen, The next important question is “how to carefully set the appropriate path and pace of further integration in the new economic and financial landscape?” With the principle of market-led integration in our region, the role of the authorities is in terms of promoting integration and establishing infrastructures that may be too costly at the initial stage for the private sector. In this spirit, the direction and speed of integration will be largely determined by market forces. The private sector will therefore, all the more important, need to spearhead with their ingenuity, creativity, and determination and also work closely with authorities. However, the authorities still have a main role in determining the degree of capital account openness which is a necessary condition for greater financial integration with external markets. It is true that resisting further capital account liberalization over an extended period is likely ineffective and counterproductive. Yet, as recent events have demonstrated, large and volatile capital flows can become a destabilizing effect on an economy, and, with limited monetary policy tools, it may be necessary to “throw sand in the wheel” when circumstances warrant to preserve the overall economic and financial stability. This is still a topic for open debate, but I think I would like to move on to other important points. Ladies and Gentlemen, To facilitate greater integration both at the global and regional levels, increased economic and financial resiliency is unquestionably a prerequisite for success. In our region, much has been achieved since the Asian financial crisis recovery period.

This crisis has notably demonstrated the lack of financial experts who are well-versed in financial innovation and risk management both in the public and private sectors. We need experts who can deal with problems through creative thinking as unforeseen risks likely lie ahead along the future path of integration. The sharing of knowledge and information will crucially help fill the gap among our regional experts. As for regional cooperation, it is essential to further enhance regional surveillance especially in the areas of financial markets. Crisis management increasingly needs close regional coordination to strengthen effectiveness of the chosen measures and avoid beggar-thyneighbor actions. And in terms of the scope, we also need to reach out more to our neighbors in South Asia and the Middle East so that they become the more important partners in both trade and investment spheres. Ladies and Gentlemen, To conclude, Asian economies have come a long way in this sea expedition of economic integration. Throughout the journey, our boats have survived many storms. We know that we can lend a hand to one another if our fleet of boats moves together as a group. During this current heavy storm, we learn that we need to be wise in steering the boats to go forward. There is no turning back. After all, we know from experience that all storms will end one day and the more resilient fleets will recover faster and have a better chance of reaching the destination. Thank you very much for your attention. BIS Review 147/2008  5