system. going forward, the pace of asian regional economic and financial integration will gain momentum, driven by structural factors, by the conscious policy to put in place the enabling environment and by the benefits derived that are mutually reinforcing. the evidence in this decade has demonstrated that a more integrated and cohesive asia contributes towards more balanced global growth, while a more resilient asia contributes to greater global financial stability. while a more connected world in this new phase of globalisation will bring new vulnerabilities, it also brings with it the promise of new opportunities, new relationships and partnerships in the world economy, and thus, new prospects for a greater shared prosperity.

being placed on strengthening economic and financial linkages in the region. intra - regional trade which has been a major contributor to the recent recovery in asia, has risen from an average of 32 % of total exports in 1995 to exceed an average of 50 % in 2008. of importance is the rising share of intra - regional trade for final demand in asia. this reflects an important change in the pattern of trade amongst the asian economies. the pace of intra - regional investment flows has also gained momentum. businesses in the region are increasingly leveraging on regional complementarities as well as taking advantage of the opportunities created by the growing markets throughout the region. a more recent development is the strengthening financial integration within the asian region. while regional financial integration will further facilitate the already strong trade and investment linkages in the region, a more important aspect of the increased financial integration in asia is the more efficient intermediation of funds in asia. this includes the recycling of some part of the sizeable savings in asia to productive investments in the region. the average savings rate in asia is 35 % of gdp and asia as a group has a total of usd 4. 8 trillion in foreign reserves. with greater liberalisation of the financial sector and the capital account, and the increased linkage of the national payments systems in asia, there are increased financial flows within the region. this trend is reinforced by the increased presence of regional institutions in the individual domestic financial systems and asia ’ s favourable economic prospects and more developed financial markets. this has already resulted in volatile capital flows to the asian region. going forward, papers issued out of asia will also likely assume greater importance as an asset class. it will serve to facilitate the further diversification of risks and thus, contribute to stability of the international financial system. it will also expand the options for investors and borrowers and thus, contribute to more efficient allocation of financial resources across borders. asia ’ s economic and financial integration, however, extends beyond its own region to the traditional markets in the developed economies, and more recently to other emerging economies in other parts of the world. today, the economic and financial linkages between the emerging economies have also gained significance. while world trade has, on average, expanded by 16 % over the period 2004 – 2008, asia ’ s trade with the middle east and latin america has increased on average by about 30 %. asia ’ s trade with other emerging economies now stands at 13 % of asia ’ s total exports. a further recent development is the increasing