This arrangement also demands for higher standards of disclosure and transparency which in turn, acts to strengthen market discipline. Regional monetary and financial cooperation The Asian financial crisis has also prompted greater regional monetary and financial cooperation. Earlier regional cooperation had focused mainly on trade, investment and development. This decade has seen the cooperation shift to efforts to address financial stability issues, namely surveillance, crisis management, liquidity support arrangements, financial supervision and financial market development. Other areas include the payments and settlement system and capacity building in the financial sector. The route that Asia is taking to forge greater financial integration will therefore be different from that of Europe. Unlike in the European Union, Asia does not have centralised institutions to coordinate financial integration but rather has leveraged on the existing intraregional groupings and networks to forge greater cooperation and collaboration in areas of common interest. This is mainly through the ASEAN+3 and EMEAP which comprise the East Asia Pacific central banks. Secondly, a common currency is not on Asia’s medium term agenda. To minimise exchange rate risks and to facilitate intra-regional trade and investment, a number of countries have initiated bilateral arrangements to use domestic currencies for trade settlement. There is also now a pooling of reserves so as to have in place liquidity support facilities for the region. Conclusion Let me conclude my remarks. Asia is very much part of the changes that are taking place in the global economy and the international financial system.

Private investment activity is also beginning to pick up after a period of over capacity due to the excesses prior to the Asian financial crisis. There are also plans for massive investment in infrastructure development to sustain the economic competitiveness of the region. The Asian Development Bank estimates that Asia will require about USD 8 trillion of infrastructure investment in the next decade. Most important is that Asia has the internal capacity from its high savings to finance these infrastructure requirements. The stronger domestic demand in Asia is also well supported by the strengthened financial systems following the restructuring of the banking sector, the development of the capital markets and the strengthening of the regulatory and supervisory systems in the post-Asian financial crisis period. The reforms implemented also included the progressive deregulation and the move to greater market orientation and increased liberalisation. Today, Asia’s capital markets are significantly deeper and more liquid. The bond market in emerging East Asia has increased by more than seven-fold since 1996, with a current value of USD 4.2 trillion dollars. Emerging East Asia accounts for 7.2% of the total worldwide bond market at end-2009 compared to 2.5% in 1996. Asian banks have stronger fundamentals with improved risk management and governance practices, with capitalisation well above the regulatory requirements and with non-performing loans maintained at historical lows. Riskbased approaches to supervision have also been widely adopted across Asia.