precisely to prevent the recurrence of dislocations whose magnitudes are felt worldwide. the basel 3 accord, financial market infrastructures, systemically important financial institutions, corporate leverage, liquidity, shadow banking, large exposures, interconnectedness, managing capital flows, otc derivatives, consumer protection. these are but some of the components of the evolving global reform agenda. the change institutionalized by each one of these is structured precisely to better achieve financial stability. the significance of the moa this is why today ’ s event is nothing short of a milestone. bis central bankers ’ speeches the five institutions represented here publicly recognize that financial stability matters. we appreciate that the task is extensive and challenging but we are driven by our common commitment to nurturing the gains that we have already achieved by recognizing the intricate nature of financial risks. this healthy respect for financial risks balances the rewards that we can reasonably expect from such exposures as against the need to remain prudent in taking on acceptable risks. we likewise fully appreciate that each of the institutions will continue to oversee their respective markets and / or pursue their respective mandates. but the financial system is certainly much more than the collective sum of the parts. this synergy brings forth the risks and rewards that are at the heart of financial stability. the progress thus far ladies and gentlemen, we mark a historic day for the financial system by signing a document that binds five financial authorities towards pursuing the financial stability agenda. the truth is that our work on financial stability does not only start today. the various committees have invested their time and effort for over a year now. they have been evaluating global, regional, local developments, with the end in view of pro - actively positioning our financial market for evolving challenges. for the silent but diligent work that the five workstreams, our steering committee and the administrative team have put forward to - date, we in the executive committee sincerely thank you. we recognize the enormous challenge before you and as a small token of our appreciation of your efforts, may i call on everyone to give these men and women a hearty round of applause. with a collective commitment and a shared responsibility to implement the financial stability agenda, i am sure that we will be able to rise to this challenge. thank you very much and i wish you all a pleasant day. bis central bankers ’ speeches

time, however, global financial integration has also enabled the cross - border trading of complex and potentially risky financial assets. it also brings about the possibility of sudden stops in capital flows in times of market stress. excessive financial openness therefore raises important policy concerns relating to the monitoring and surveillance of the flow of capital, as well as the formulation and implementation of appropriate policy responses. the latter concern provides important food for thought as we pursue efforts to reform our foreign exchange regulatory framework. as we noted earlier, economic literature holds that the freer flow of capital confers several important benefits to the economy. however, the realization of these benefits depends critically in part on threshold effects related to the level of development of domestic financial markets, the quality of institutions and corporate governance, the nature of macroeconomic policies, and the extent of openness to trade. in other words, reaping the growth and stability benefits of financial globalization requires prudent macroeconomic policies, appropriate prudential regulation, and sound institutions. the bsp therefore must remain vigilant on all these fronts when pursuing financial openness. monetary policy imperatives for us at the bsp, vigilant and sound policymaking necessitates keeping a watchful eye on price developments, since price stability is the bsp ’ s primary mandate. the bsp will therefore remain vigilant against the threats to inflation and inflation expectations. to the extent that risks to inflation are reduced by easing supply - side pressures, we will have more flexibility in determining appropriate monetary policy settings that will promote price stability that is conducive to balanced and sustainable economic growth. we will watch closely for future signs of easing inflationary pressures as well for price pressures that are still in the pipeline, since their pass - through is expected to continue for sometime. the challenge is to ensure that monetary policy settings are calibrated as appropriate so that there is sufficient confidence that inflation would be on a declining path over the near - and medium - term to keep inflation expectations well anchored. at the same time, the bsp also remains strongly committed to provide necessary liquidity in the financial system for banks that may need funds to ensure the normal functioning of credit and financial markets. conclusion indeed, important lessons have emerged from the ongoing global crisis. nevertheless, asian economies continue to face difficult policy questions on how best to manage risks, individually and collectively. this represents fertile area for research, particularly on what asian economies can do outside of existing institutional arrangements. similarly, the