crisis in the emerging world. but, in fact, it has been a domestically generated credit event in the world ’ s most sophisticated economy, the united states, that has triggered the recent reappraisal of risk. the resulting financial strains have been most acute in the developed, rather than the developing world. this episode may have some time to run. but the sooner the exposures to problem assets are accounted for and disclosed, the sooner markets can get back to pricing risk prudently and providing credit on sensible commercial terms. at present, without enough information, they are operating on an impossibly short timeframe, out of fear of what tomorrow might bring. asian countries appear, to date, to be weathering the storm fairly well, as is australia in my view. but the episode reminds us all of the importance of working to improve the resilience of our own domestic financial systems and policy frameworks, and of the task, as yet uncompleted, of building better international arrangements for the future.

stephen grenville : policy dialogue in east asia what are the criteria for determining the number of groups for policy dialogue in east asia? and the criteria for participation? talk by mr stephen grenville, deputy governor of the reserve bank of australia, to the australian national university conference on regional financial arrangements in east asia, canberra, 12 - 13 november 2001. the references for the speech can be found on the reserve bank of australia ’ s website. * * * i want to begin by clarifying the issues, as i see them. if we can define what we are trying to achieve with regional co - operation, then we will be in a better position to determine the nature of the regional groupings needed to achieve this. my brief today is to discuss the relevant criteria for groups which carry out a policy dialogue in east asia. in defining the area of interest, i may widen this brief somewhat, because the sort of regionalism which i hope will develop over time goes well beyond policy dialogue, and indeed policy dialogue in its narrow sense does not seem to me to be the most pressing need. policy dialogue, as it evolved in the post - war period, was largely about macro - economic policy co - ordination, and this was really only relevant for the largest countries – essentially the g3. for the rest of us, this was not a case of policy dialogue, but rather monologue – the g3 did what they could in terms of international co - ordination, and we wore the results, principally in the form of substantial fluctuation in the g3 exchange rates, which was often inconvenient to many. so there certainly remains a major issue of international macro policy co - ordination, and perhaps we might hope to have some input to it from the periphery, but this will not be central to our regional arrangements. there are, however, important areas where regional arrangements have the potential to be very important for the development of policy : these are trade and ( less certain ) exchange rate arrangements. the first of these seems beyond the scope and brief of this paper, so i will leave it untouched : the second is the focus of discussions tomorrow, so that, too, i leave to others. this still leaves important regional policy issues, including the possibility of policy co - ordination in the face of a repeat - or variation - of the 1997 / 98 asian crisis - i will certainly talk about this. but the much more general, wider and perhaps more important issue relates to globalisation