national prerogative, though the rules were admittedly stiffened somewhat. as a result, the balance between liability and control has been thrown out of kilter. this approach might have been politically expedient at the time. but ever since the greek crisis this spring, which is perhaps the most extreme manifestation of this issue, its limits have been laid bare for all to see. invoking independence while receiving assistance has sparked political tensions and economic uncertainty. there is no getting around the fact : the combination of national sovereignty and common solidarity can pose a risk for the stability of our monetary union. a high degree of solidarity certainly helps a country in crisis to cope in the short - run. but by allowing for a shift of a national fiscal burden onto the community of all member states, incentives for sound policymaking are weakened in the long - run. the underlying economic problem here is known as the tragedy of the commons. let ’ s take the example of overfishing : just as overfishing by one fisherman reduces the fish available bis central bankers ’ speeches for others and threatens its population in the long - run, excessive public debt harms the euro area as a whole. rising debt in one member state drives up longer - term interest rates for all euro - area countries. and if excessive debt of one state threatens the financial stability throughout the euro area, the viability of the whole project could be called into question. the point of the tragedy of the commons is that it is completely rational for one fisherman to overfish and so to destroy the basis for the economic activity for others and for future generations. so what we have here is a classical coordination failure – similar to the wellknown prisoner ’ s dilemma. in one of its recent issues, the economist took what at first glance appeared to be a surprising decision to write an obituary for a baseball player. the player in question was one of the most successful players of all time. but yogi berra rose to international prominence not only because of his prowess as a baseball player, but even more so because of his playful philosophical musings. apparently, the economist thought his remarks offered insights into economic matters as well. and indeed, he once neatly summarised the problem of inflation with the words “ a nickel ain ’ t worth a dime anymore. ” this, however, does not seem to be the most pressing problem facing the euro area these days. but there ’ s another yogi berra insight which does go to the heart

joseph yam : the adb challenge to help asia return to stable and sustainable growth statement by mr joseph yam, alternate governor of the hong kong monetary authority, at the 35th asian development bank annual meeting, shanghai, 10 - 12 may 2002. * * * mr president, i would like to first congratulate you on your re - election as the president of the bank. i would also like to thank the government and the people of the people ’ s republic of china for their hospitality in hosting this year ’ s annual meeting in this magnificent city of shanghai, itself a powerful symbol of tradition and modernisation. i also express my sincere appreciation to the bank ’ s management and staff for the excellent arrangements made for this meeting. i join others in adding our special welcome to our new member of the bank – portugal. poverty is reduced more extensively at times of fast economic growth but less so when growth slows. the past year has been a difficult one for the poor. amid the synchronised slowdown of major industrial economies, economic growth has been slow and uneven in asia. the terrorist attacks on the us on 11 september shocked the world. the enron debacle and the argentine economic crisis cast long shadows on the equity and financial markets worldwide. against this background, the task of poverty reduction is made more daunting and pressing. however, i must commend the bank for meeting the challenges of last year by mapping out and implementing the long - term strategic framework. the framework seeks to reduce poverty through three core areas of sustainable economic growth, inclusive social development and good governance. the strategy is a sound one as it does not focus solely on physical infrastructure, i. e. the building of roads, bridges and other “ hardware ”, but also on the “ software ” of policy and institutional reform in the public and the private sectors. the strategic framework also attaches importance to private sector development, particularly in the fields of finance, banking and corporate governance. the quality of the “ software ” of a developing economy is precisely what international investors are looking for as they return to asia. at a time when asian economies are showing incipient signs of recovery against an improved external environment, international capital flows are triggering back to the region but in a more cautious and discriminate manner than before. investors are now a lot more selective about who may lend to and where they put their money. international capital flows from oecd markets to asia, in the form of bank