option, companies that use international accounting standards will be permitted to apply fair value accounting to certain financial instruments that they designate at the time of purchase or origination. accordingly, firms using the fair value option could mark to market both the credit derivative and the hedged position and report changes in their fair values in current earnings. while at first glance the fair value option might be viewed as “ the solution ” to addressing the problems of the mixed - attribute model, it also raises a number of concerns. many of these concerns, as well as recommendations to address them, were included in a comment letter to the iasb from the basel committee on banking supervision ( basel committee ) issued on july 30. 2 let me first summarize some of the basel committee ’ s concerns, many of which are similar to those i described earlier. addressing reliability and verifiability issues, the committee suggested that, without observable market prices and sound valuation approaches, fair value measurements are difficult to determine, verify, and audit. it also suggested that reporting will become more complex and less comparable. the basel committee comment letter also discussed the “ own credit risk ” issue. if an entity ’ s creditworthiness deteriorates, financial liabilities would be marked down to fair value and a gain would be recorded in the entity ’ s profit and loss statement. in the most dramatic case, an insolvent entity might appear solvent as a result of marking to market its own deteriorated credit risk. to address these concerns, the basel committee recommended certain restrictions on the fair value option, such as disallowing the marking to market of credit risk of the institution ’ s own outstanding debt and prohibiting the fair value option for illiquid financial instruments. it also suggested that the fair value option be limited to transactions that seek to economically hedge risk exposures and to situations in which accounting volatility associated with the mixed - attribute model can be reduced. lastly, it recommended enhanced disclosures related to the fair value option. representatives of the basel committee continue to work constructively with the iasb on these issues, and i believe this dialogue can lead to a more - balanced approach to the fair value option that supports transparent accounting and sound risk - management policies in a manner consistent with safe and sound banking practices. as banking organizations using iasb standards consider how to use the fair value option for their own financial reporting purposes, additional issues should be considered. for example, if loans are accounted for under the fair value option,

eddie yue : asian development bank – working to reduce poverty in asia statement by mr eddie yue, deputy chief executive of the hong kong monetary authority, and head of delegation, hong kong, for the 49th asian development bank annual meeting, frankfurt am main, 3 – 5 may 2016. * * * i would like to thank the government of germany for hosting the 49th annual meeting of the asian development bank ( adb ), and the management and staff of adb for the excellent arrangements of the event. i would also like to congratulate adb for the successful conclusion of the eleventh replenishment of the asian development fund, which would provide critical resources to adb to further its work in poverty reduction in asia. adb is approaching its 50th anniversary this year. over the past fifty years, asia has undergone tremendous development. the economic miracle in asia, together with the important work of the bank, have lifted millions of people out of poverty and substantially improved our standard of living. after decades of rapid growth, however, there have been signs that the trend growth of the region is slowing. this reflects, to a considerable extent, supply - side constraints on potential output. in particular, a number of emerging economies in the region have been held back by infrastructure bottlenecks. as i have noted during the past few annual meetings, to sustain growth and propel the economy to the next stage of development, boosting infrastructure investment is a top priority for many developing members in the region. the infrastructure demand in asia is huge. adb estimates put the overall infrastructure investment needs of asia at us $ 750 billion per annum over the 2010 – 2020 period. in the meantime, there is no lack of investors interested in infrastructure investment or financing. despite a generally longer investment cycle, infrastructure projects can offer relatively stable returns and a hedge to inflation. that is why sovereign wealth funds, insurance funds and institutional investors have shown a growing interest in infrastructure investment in recent years. however, despite this increasing interest in infrastructure investment, there are significant impediments in channeling savings into infrastructure financing in emerging asia. put it in the language of bankers, there is a shortage of “ bankable ” projects, due to lack of a credible public - private partnership ( ppp ) framework ; deficiency in regulatory regime and legal environment for contract enforcement ; lack of transparency for monitoring project implementation ; and political uncertainty. the above impediments call for coordinated efforts to facilitate financial intermediation, lower barriers to investment,