to the value chain for the more advanced countries of the region. japan and korea are already using asean countries and china as the platform for production of goods in a cost effective way while providing design, technology, specifications and taking care of marketing and sales. malaysia is beginning to feel the pinch of labor shortages and is looking towards south asian countries for relieving this pressure. singapore and malaysia are capital surplus countries with high foreign trade - gdp ratios and limited domestic markets. they are now looking towards the middle classes of south asia whose incomes are rising fast and whose appetite for goods and services is voracious. india alone is adding about 2 million cellular phone subscribers every month while pakistan has increased the size of cellular phone market from 3 million to 8 million within just one year. this example can be multiplied for fast moving consumer goods, energy, infrastructure, services of all kinds. thus investment in these countries can be beneficial for both the capital surplus and large market size countries. central asia has huge energy resources but is geographically disadvantaged as it is landlocked. infrastructure development providing access to seaports as well as gas pipelines, hydroelectric power transmission lines can make their economies more competitive and at the same time ease the energy shortages in india and pakistan. china, because of its tremendous success, is facing or likely to face growing restraints and impediments in expanding access to the western markets for its manufactured goods. joint ventures between chinese companies and relocation in other parts of the region with low costs of production combined with availability of ample labor would be in the economic interest of both china as well as the recipient countries. india ’ s proven prowess in information technology, internet - related services, biotechnology and other intellectual fields can be used to enhance the productivity across the board in all the countries of asia. given the growing demand of skills among the asian economies the inter operability of skilled manpower across the territorial boundaries of each individual country will help meet this demand. this above scenario is doable in my view but it requires a shared vision, a long term strategy, political will and commitment, a time bound action plan, an institutional mechanism for implementation and monitoring, and a machinery for follow up, dispute resolution, and problem solving. if the foreign ministers present at islamabad this week can proceed along this road map i am quite confident that all the countries in region will be winner and nobody will be loser. historians will then rightly describe 21st century as the asian century just like the past three centuries were the american and european centuries

admit to being a fan and proponent of diversity in terms of bank size and business model, as this makes our banking system more stable. supervisors are not supposed to be making structural policy ; rather, they ought to be actively working towards proportionality in regulation. this is precisely why banking regulation and banking supervision are already designed with a large degree of proportionality. however, the ambitious reforms following the financial crisis have made the rulebook more complex, particularly because the rules were oriented to the epicentre of the financial crisis : large and medium - sized institutions with risky business models. 1 this new regime has made compliance a much more difficult and time - consuming affair. this overhead is high for each and every institution - regardless of its size. however, small banks and savings banks, owing to their smaller staff sizes, are far less able to spread the costs of compliance across their employees and have to either hire additional staff or enlist external aid. this leads to comparatively higher burdens. for that reason - and because smaller institutions pose less of a threat to financial stability than medium - sized to large institutions - i think that offering relief to small banks and savings banks is the right thing to do. one thing that is of paramount importance to me, however, is this : any relief measures being discussed here have to solve the actual problem - which is not, first and foremost, the minimum capital requirements, but primarily the operational burdens imposed by the need to comply with complex rules. what this means specifically is that any relief for smaller banks and savings banks must be about removing operational burdens - and of this i am firmly convinced. on the other hand, there cannot and must not be any easing of capital and liquidity requirements. 2 / 4 bis central bankers'speeches moreover, no relief should be permitted to jeopardise financial stability. medium - sized, highly systemically interconnected institutions - those referred to as " too interconnected to fail " - and those institutions with risky business models should not be provided any relief. the recent financial crisis, during which many insolvent institutions had to be bailed out, is still fresh in all of our minds. we also need to be careful not to create any loopholes that end up being used by so many small institutions that a situation of general distress results. i am therefore firmly convinced that institutions need to be regulated with a sense of proportionality without diluting the new regulatory regime. i am committed to ensuring that the debate on greater proportionality is