both the micro and macro level face no shortage of challenges. internationally, with economic growth slowing in the major developed economies, the problems in international credit markets are still serious, and inflation rates still strong, and although there are signs of some deflationary trends, the task for policy makers is as delicate as any faced in many years. though the region has over the years substantially improved its macroeconomic fundamentals and is better suited to face external shocks, there will be fallout from the current turmoil. market volatility will undoubtedly lead to sharp downward growth revisions for 2008 and 2009, as the decline in global demand will tend to reduce regional exports of goods and services. in addition, the fall in interest rates in the u. s. will impact on both fixed and floating exchange rate regimes, while the decline in global liquidity will force curtailment of foreign direct investment and cross border flows. how we respond to the problems posed to us by the recent upheaval will be important for the robustness of the regional economy going forward. though the direct impact on the regional domestic banking sector has not been significant, largely because of the lack of sophistication and the relative of risk aversion if our regional banks, there are lessons we can draw from these events. we must respond to these changes by further strengthening our efforts at maintaining financial system stability with adequate rules and regulations while avoiding over - regulation. it happened after enron with sarbannes oxley which tended to go overboard without, some would say, achieving sufficient strengthening of the system – the results of which we are seeing today. many have now related the current crisis to market over - exuberance, coupled with less than all - encompassing regulation which was necessary to monitor the very rapid changes in derivative and structured finance instruments. the innovations and developments which spawned such instruments increased the complexity of financial transactions and made their traceability difficult. such changes were also supported by increasing levels of excess liquidity, low interest rates in the global financial market and the increased demand for variations in financial instruments, given different consumers'risk profiles. consequently, there was a further blurring of financial intermediation roles between the traditional banks and non - bank market players. risk - shifting and risk transfer eventually forced the collapse we are witnessing today. what these developments have demonstrated is that adequate regulation of the financial system in the us is important to the rest of the world. while these guidelines are set in the developed world the failure of regulation impacts us all

to the impact on the financial system when addressing the changes and dynamics of the current crisis. we also have to be able to calculate the implications of each step, prioritize policy, and maintain a good balance in the implementation. i know that the negative credit trends will filter through to our markets and is likely to affect corporations in some key sectors, particularly those who entered this phase with low levels of liquidity. this underscores the challenges of slower economic growth and, shrinking liquidity in the global economy and may mean that they turn to regional banks and to indigenous banks in particular. these challenges facing regional macroeconomic policy makers look more difficult than they have been for a long time ; but with the collaborative efforts at the micro level, the region will weather the storm. i am sure that the discussion over the next few days will help us focus on the severity of the issues, and will help us to find viable solutions to head off any potential adverse impacts. i wish again to congratulate the caib for their commitment to commercial banking in the region and to the exchange of views and ideas on the safeguarding of our future, given the global financial challenges. sometimes collaboration is important in order to make a breakthrough. i thank you and wish you a successful conference.