in the years ahead, significant restructuring of the global economy is necessary. hence, i believe a more fundamental question to frame the discussion is : “ given the economic changes and challenges ahead, how do we make the global financial system more resilient and at the same time supports economic restructuring and sustainable global growth? ” 7. it is therefore critical to get the nexus between the financial system and the real economy right. in this regard, asia ’ s needs are likely to be different from those in the advanced economies. economies in rapid transition need responsive banking and capital markets. bankers need to appreciate the changing needs of the economy, build new capabilities and develop new products and services, to support the needs of companies, large and small, in both mature and new industries. the financial industry needs to build up capabilities to understand the requirements of new industries in the technology and services arena, and to efficiently fund long term infrastructure needs. to sustain asia ’ s growth trajectory, we need to further develop and deepen national financial systems and regional financial integration. mas is studying several ideas in these areas, and we look forward to working with our counterparts in the region and with the industry to advance this. 8. let me now share the measures that mas is taking to respond to the challenges from the international reform agenda and the evolving new financial landscape. our measures are based on three key pillars. sensible rules 9. the first pillar is establishing sensible rules. mas seeks to establish sound rules of a high standard that allows well - managed risk taking and innovation, and which emphasises the stable and sustainable development of the financial services sector. the effectiveness of a regulatory framework is not determined by whether it is stringent enough to prevent any kind of shortcoming or failure of any firm. neither is it determined by how dynamic and innovative the financial services sector is. a regulatory framework focused on stringency alone would impose undue costs and constrain innovation without the assurance that it would be effective. a regulatory framework focused on dynamism alone may not offer sufficient protection to investors, depositors and customers, and may experience more disruptive consequences in a crisis. 10. mas ’ approach to rule - making is outcome - focused. this recognises that the design of regulation should take into account market realities so that unnecessary disruption to wellfunctioning markets is minimised. for example, in current proposals for a new liquidity framework for banks, having too narrow a definition of acceptable liquid assets is likely to adversely affect the

to firms with growth potential and lending without conventional collateral or guarantees. for the latter, the lending method that is considered most likely is asset - based lending ( abl ). abl takes firms ’ assets that are closely tied to their businesses – such as their inventories, equipment, and machines, as well as accounts receivables – as collateral. abl currently plays a limited role in japan but is a quite popular lending method in the united states. the greatest merit of abl is that it enables firms that do not have sufficient real estate collateral or corporate managers ’ personal assets to raise financial resources. for example, start - up firms tend to have a high ratio of accounts receivables to total assets. they will be able to raise funds for business expansion more smoothly if they can make use of their accounts receivables as collateral. abl is said to be more time - consuming compared with lending against real estate collateral. viewed in another way, however, the process of utilizing abl allows a borrower firm and a financial institution to take more time and have closer communications regarding the characteristics and future vision of firms ’ businesses. this will encourage a borrower firm to make business decisions based on more accurate analysis of its growth potential and profitability. furthermore, the bank has taken various measures in terms of supporting the disaster areas. one example is the funds - supplying operation that provides financial institutions in disaster areas with longer - term funds at a low interest rate, with the aim of supporting these institutions ’ initial efforts to meet demand for funds for restoration and rebuilding. going forward, in the phase when demand for funds for the purpose of restoration and rebuilding becomes full - fledged, the bank will examine how to provide additional support appropriately as the central bank, based on the specifics of such demand, measures by private financial institutions, and support from the government. in this manner, the bank has continued to make various efforts on the monetary policy front, taking into account the time horizon of short - term and medium - to long - term periods. the bank will continue to carefully examine the outlook for economic activity and prices, and take appropriate actions as necessary. concluding remarks i see i am running out of time, so i would like to conclude my remarks. the earthquake has posed additional challenges to japan ’ s economy, which had already faced significant problems to tackle. it is true that japan ’ s economy is facing very difficult challenges. however, we should avoid falling into pessimism