flashing lights far ahead of the 2008 global market mayhem. in order to preserve stability of the banking system throughout the crisis, resolute action had to be taken years ahead of the global financial crisis. in the period of large capital inflows, raising interest rates to tame the cycle was not a policy option due to the risk of exacerbating capital inflows even further. therefore, already in 2003, in the early phase of the cycle, the cnb started to implement a range of measures to limit excessive lending and the increase in foreign debt, which were gradually adjusted and tightened until 2007. stringent capital and liquidity requirements, way above and beyond anything we have available in the current macroprudential setup, were necessary in order to stem excessive risk - taking and instil resilience into the system to cope with a potential fallout. such measures were at that time labelled ( by banks and some of the colleagues ) " administrative " tools, but would later be classified under macroprudential policy instruments. for example, implicit tax on credit growth ( when we asked banks to subscribe zero yielding cb bonds for any euro of credit growth over 12 % per annum ), and high marginal reserve requirement on foreign borrowing by banks, together with high capital requirements. episodes of global financial crises are an excellent illustration of how macroprudential policy measures can be activated in a counter - cyclical manner. in the upward phase of the financial cycle, they were undertaken in a timely manner, with the aim of limiting banking system's exposure to risks and strengthening its resilience by building additional reserves. after 2008, in the downward phase of the cycle, this extra liquidity was released to provide support to the financial sector and the economy. the banking system remained highly capitalized and profitable at the aggregate level. only a few smaller banks left the market, and there was no need for bank resolution, apart from one regionally significant bank. a different scenario from that in a number of european countries, which went on to bail out banks at a very high fiscal cost. still, a deep recession took place during the gfc, demonstrating the need for a macro - prudential policy to work hand - in - hand with other policies. even a very tight financial regulation may fall short of fully curtailing the buildup of macro imbalances and their eventual unwinding. capital inflows came to a halt and borrowing costs surged as risk premia increased due

have made steady efforts to develop the local currency bond markets. along with the faster growth and improved fundamentals of the region, there has been a rapid growth of the regional bond markets in recent years. notwithstanding this encouraging development, the capacity of the regional bond markets is still limited when compared with the huge financing needs of the region. much work still needs to be done to develop a deep and liquid regional bond market, including but not limited to expanding the issuer and investor types, gradual liberalisation of barriers to entry of non - resident investors, promoting development of hedging tools, enhancing financial infrastructure linkages, improving corporate disclosure and transparency, and greater standardisation of legal and governance terms. policymakers, as market regulator and market facilitator, should further their work on these fronts. adequate investment in infrastructure is crucial to promoting the further growth of the region, spreading the fruit of economic developments and raising the living standards of people in asia. given the region ’ s huge infrastructure needs, mobilising private sector investments is important. governments and adb have a key role to play in promoting an enabling environment for private investment. making this right will enable the region ’ s vast savings to be efficiently channelled to fund its own investment needs, thus helping the region to realise its full growth potential. thank you. bis central bankers ’ speeches