stress this fundamental aspect. if we fail to adhere to it, we will then have all the ingredients for further crises. a number of the criticisms directed at re - regulation concern its contradictions, real or assumed. for example, some feel that the tightening of capital and liquidity ratios is too severe and risks adversely affecting the financing of economies. does this criticism strike you as justified? jean - claude trichet : in our view, the rules which have been defined for capital requirements are optimal. we reflected long and hard on them. of course, there are arguments in both directions, but considering the drama resulting from a crisis in terms of lost growth and job creation, we gain a lot more by being reasonably demanding in terms of capital. preventing further crises from occurring is a benefit that far outstrips the potential losses, if certain analyses are anything to go by. let ’ s be clear one more time : these decisions, debated at length by those primarily responsible, have been evaluated at governor and ministerial level and adopted at the global level by heads of state and government. they must be implemented. another criticism : this tightening of the rules runs the risk of producing a concentration in the financial sector, and on the financial markets as well, which is even stronger than it is today. jean - claude trichet : i do not believe so. we must be constantly and closely vigilant with regard to the structural changes to international finance. there are permanent risks that we must continue assessing, but i do not think the rules we have just defined, or those still being worked out, will lead to this hyper - concentration. on the contrary, i have to say that one of the main lessons of the present crisis is that there were very high risks associated with what i would call the “ financial mammoths ”. is too little attention being paid to the much - discussed area of “ shadow finance ”? – the issue of the “ non - banks ”, of shadow finance, and of all the institutions or market participants not under the oversight of the banking supervisors, is very important. over the last two decades we have witnessed a tremendous explosion in new financial institutions. i myself lived through a period during which all the institutions with high leverage, by the end of the 1980s, were managing capital worth something in the region of usd 100 billion. 17 years later, in 2007, the figure was usd 3, 000 billion! very significant financial services have been, and are being, rendered by these market

their earlier prudent levels of net indebtedness. these considerations further underscore the importance of quickly completing the process of banking sector rehabilitation and of attracting new sources of capital. such decisive action would allow the banking sector to again be an engine of growth, capable of offsetting the eventual withdrawal of fiscal stimulus. conclusion in closing, the recovery in asia has been impressive indeed, and owes much to the energy and hard work of its people, enlightened political leadership, and the substantial and focused efforts of policymakers to implement sound macroeconomic and financial policy. but the recovery is not yet complete and much remains to be done. while the crisis did substantial damage, it has not fundamentally affected asia ’ s prodigious economic strengths. but if asia is to realize its potential, it is critical that authorities attend to the unfinished business that remains while continuing to put in place longer - term measures to promote financial resilience, ensure the sustainability of public sector debt burdens, and encourage sustainable growth. asia is at an important crossroads and there is now a unique opportunity to consolidate recent reforms and implement lasting change that will pay dividends for years to come. thank you for your kind invitation and attention. i would be happy to take any questions you may have.