have traveled on. as our previous experience has shown, we need to constantly recognize that strategies that serve well in today's environment would not necessarily be a formula for success in tomorrow's environment. in looking at the future terrain of the financial sector in malaysia, six trends are particularly important – first, the changing configuration of the global economy and global financial markets ; second, regional economic and financial integration ; third, financial sector development amidst increased liberalisation in the asian region ; fourth, increased role of domestic demand in the asian economies ; fifth, growing significance of islamic finance in the international financial system ; and finally, developments in the regulatory structures and approaches. it can be expected that all these trends will have a significant bearing on the future of the banking industry. first, the global economic configuration has been altered by the emergence of several large emerging economies into the global economy. this is especially evident in asia, where the rise of china, india and the south east asian economies have increased asia's global role. as a result, asia today features four 1 of the world's twelve largest economies and several of the fastest - growing economies. collectively as a region, asia contributes about 40 % of global output 2 and one - fourth of world trade. the region is also a significant net exporter of capital, holding two - thirds of the world's foreign exchange reserves and is the largest holder of the developed economies'sovereign bonds. one - quarter of fortune's top 500 global companies are asian corporations. this opens up tremendous business opportunities for malaysia as a part of this dynamic growth region. accompanying these changes has been the prevalence of abundant liquidity in the global financial markets, resulting in an intensified search for higher yields. these trends are encouraging flows into the capital markets of emerging economies, presenting new opportunities for wholesale banking and capital market related financial services. these flows, however, also pose potential risks of reversals in financial market conditions. this increases the need to ensure that we have the capacity to absorb or adjust to changing financial flows. a second significant trend shaping the future financial landscape is the intensification of regional economic and financial integration. economic integration through trade is already well - advanced in asia, with the share of intra - regional trade already more than half of the total trade in asia. more recently, however, greater financial integration at the regional level has been an important development, bringing complementary and mutually - reinforcing benefits to the economies in the region. intra - regional investments among the

seung park : the asian economy in the 21st century speech by mr seung park, governor of the bank of korea, at the korea economic institute of america, washington dc, 26 september 2005. * i. * * greetings president joseph winder of the korea economic institute of america, director richard bush iii of the brookings institution, ladies and gentlemen, i am delighted to be here today at the joint invitation of the brookings institution and the kei. i particularly welcome the chance to meet again with president winder and all members of the kei after one year has gone by. i also feel myself privileged to meet director bush of the world renowned think - tank, the brookings institution, and all those associated with it. today i would like to speak to members of your two institutions, which act to build bridges between the united states and asia, including korea, on the theme of'the asian economy in the 21st century.'i am sure that all members of this distinguished company will have remarked that nowadays, wherever senior figures involved in economic affairs get together, the topic of conversation quickly turns to the chinese and indian economies. world interest is now focused on china and india, which have recently continued to show rapid economic development, following on from japan, which has grown to be the world's second largest economic power, and the four asian dragons including korea, which experienced a successful process of industrialization within a very short period of time. strikingly, several experts foresee that before too long the asian economy will eclipse those of north america and europe in terms of economic scale. at the bank of korea, we have been carrying out research into the progress of economic development in the asian region over the next half - century. we are now almost ready to wrap up this research, and today i would like to speak about the asian economy of yesterday, that of today and that of tomorrow, based on the statistical forecasts derived in the course of the research. ii. why did the asian economy suffer long - term stagnation? from historical perspective, asia witnessed the meteoric rise of three of the four great human civilizations of antiquity. in many and arguably most aspects of science, culture and so on, it was ahead of the western world. in spite of the brilliance of these ancient civilizations, until about 50 years ago most asian regions had sunk deeply into poverty and their development presented a picture of stagnation. on the other hand, although not the origin of human civilization,