It accommodated, if not supported, decisions by its members to calibrate policies designed for a more benign external environment than was realistic and therefore encouraged less self-insurance than was necessary to manage safely. And it was drawn too far into a range of efficiency-improving long-term institutional reforms that necessarily diffused attention from critical vulnerabilities. BIS Review 37/2004  3  To some extent, these criticisms suffer the classic failure of claiming that what seems obvious in hindsight was as clear at the time. Many are unfair in the degree of influence they expect the Fund to be able to exert over a reluctant member - recall the constraints I described at the beginning on the Fund’s powers over its members. And many of the criticisms fail to recognize the difficulty of making definitive judgements about the path of policies consistent with sustainability. Yet elements of this general diagnosis of the Fund’s policy advice to emerging market economies have substantial merit. If the Fund is going to contribute to a process of well-targeted reform, particularly in the more vulnerable countries, it probably needs to raise the bar, to increase the level of ambition of its policy recommendations. Greater policy focus is required on the principal sources of near-term vulnerability, ideally without fully eclipsing longer-term institution building and structural reforms important to raising growth potential. A risk-based framework for determining the hierarchy of policy priorities is important.

But I do want to remind ourselves to stay vigilant and ensure that implementation is seen through, as this work has not yet been completed. For example, initial margin requirements on non-cleared derivatives, which guard against the overuse of embedded leverage in derivatives, are still being phased-in in a number of jurisdictions including Hong Kong. At the same time, while derivative transactions that are intended to be cleared has increased five-fold in the past four years in Hong Kong, according to data from our Trade Repository, there is more room for further standardisation. Finally, solutions such as deference mechanisms, which helps eliminate cross-jurisdictional regulatory arbitrage, are still works-in-progress between the HKMA and our overseas counterparts. As we embark on further deepening of the derivatives markets in the Asian region, the high standards set up by regulators and by the industry over the past ten years should be well respected, and strengthened regulations on margins, clearing, and transparency should be taken seriously as safeguards against potential risks. Let me close by saying a few words about our host today. ISDA has been instrumental in promoting standardisation of documentation and practices in derivatives markets. In the process, it has played a key role in navigating the industry through post-crisis reforms. ISDA is and will continue to be an important platform for consensus building and knowledge sharing. I’m certain that ISDA will remain a valuable partner for everyone in Asia as we continue to overcome the challenges I discussed today. I look forward to more fruitful collaboration going forward.