of gdp as at end - july 2009, while the growth of credit to the household sector has continued to increase in this recent decade. of significance is the quality of these assets, measured by the level of non - performing loans, remains low. the second strategy is the further diversification of the external markets, in particular, to accelerate the efforts to foster greater regional trade ties, for asia. it would also shift the composition of intra - regional trade from intermediate inputs for the production of goods for final demand to the traditional markets, to a more balanced composition with increased share to meet final demand within asia. first, as the emerging economies, in particular asia, gain importance as growth centres, the cumulative markets of asia as export destinations will expand over time. the rapidly rising asian middle income class will increase final demand for goods and services. second, asia can leverage on its immense diversity as a source of economic complementarities. the “ flying geese model ” illustrates how asia had, in the past, harness the diversity of the. going forward, similar emphasis can be adapted beyond merely for the production of goods for final demand outside asia, and draw on the different comparative advantages of the asian economies. financial integration as a third strategy the third strategy is the promotion of deeper financial integration. this is important for further advancing the economic development of the region. financial integration is generally associated with capital mobility and refers to the extent to which an economy's financial system is interconnected with other financial markets. a fully integrated financial system will be one in which potential market participants, both in the banking sector and financial markets, adopt a single set of rules, have equal access and are treated equally. this would in turn be reflected in an international convergence in the prices of financial products and assets, with low transaction costs that encourage the institutions, issuers and investors to venture beyond the domestic markets into foreign markets. essentially, the end goal of financial integration is to establish a free flow of finance and capital, akin to trade integration which aims for the unrestricted mobility of goods and services. deeper financial integration would further enhance the competitiveness and dynamism of asia. broadly, greater financial integration would bring about three key benefits. first, financial integration fosters greater competition and economies of scale in the financial system, thereby improving the efficiency in the allocation of capital within the region and thus increase the capacity of the financial system to meet the differentiated and growing demands of investors. while the individual asian financial markets, on their own,

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