, human capital development is pivotal. it leads to greater value creation, enhanced technological readiness and the capacity to innovate and adapt – all of which are key for firms to operate in the new landscape. productivity is thus not only a function of physical technology, but of talent development, including leadership development, given the increasing dynamic and complex environment. in the area of regional collaboration and cooperation, the asian region is well ahead in the areas of surveillance arrangements, financial safety nets and crisis management. these frameworks and arrangements were established in the period of relative stability since the asian financial crisis. the establishment of regional arrangements and platforms, including the building of regional financial infrastructures and markets, is not only aimed at facilitating the efficient intermediation of financial resources in the region, but also at safeguarding financial stability in the region. this trend paves the way for coordinated policy actions to manage and mitigate the risks and vulnerabilities to the region. given our diversities, there is also tremendous opportunity for the private sector, in particular in asean, to integrate further in the areas of trade, investment and finance, and to leverage on the respective comparative advantage that exists in the region. conclusion while we could best prepare for the future using all the knowledge that we currently have, the transition towards the new landscape will continue to be paved with uncertainty and new challenges. further, there will be increasing complexity in the functioning of the global economy and the international financial system. in this environment, perhaps the best compass for policy - makers and businesses is one that is centred on principles ; in particular, on ethics and integrity. recent experiences in the advanced economies have put this into question. this needs to be restored. the next generation of policy - makers and leaders in business will be defined not by the power they hold and the amount of wealth they amass, but by the stewardship they exercise in serving the people and the responsibility they demonstrate to their communities. thank you. bis central bankers ’ speeches

largely from the renewed weakness of the economic recovery in several of the major advanced economies. in the united states, the significant monetary accommodation, reinforced by the large scale financial market interventions and the significant fiscal stimulus during the early stage of the crisis, has averted an economic depression, but it has not, however, brought about a sustained recovery. in europe, an economic contraction is being experienced, resulting from the combination of fiscal austerity, tight credit conditions, and the continued uncertainty and volatility in the financial markets. while important progress has recently been made in europe on the arrangements that will contribute to containing significant high - risk events, and in paving the way towards a more sustainable and integrated european region, its immediate - term effects on economic recovery is likely to be limited. there are several factors that are containing the potential for sustained growth in these economies. this can be classified into seven categories. firstly, is the gradual process of unwinding the excesses that had been built up over several years. these include the high degree of indebtedness by households, the financial sector and the public sector. secondly, is the significant long - term structural adjustments that are needed to regain relative competitiveness. this will involve greater efficiency and innovation within existing industries, and the shifting of resources out of industries in which these economies no longer have comparative advantage, into new industries which have comparative advantage. while the bis central bankers ’ speeches former may result in economic gains, it may not necessarily be accompanied by increased employment, and the latter may result in temporary economic dislocation and increased unemployment. thus, even if such policies were to yield results, they may not produce a robust recovery of economic activity and a reduction in unemployment in the short and medium term. the third is the need for the introduction of new institutions and the transformation of existing institutions to render them relevant to the changed environment. while existing institutions may need to be transformed, merged or even dissolved, new institutions may need to be established to facilitate management of the new environment. the same will hold true for businesses if they are to remain competitive, and, in particular, if they should venture into new areas and across borders. the fourth category of factors concerns economic and financial management. macroeconomic policies in most of these economies have been pursued to the limit, rendering limited policy flexibility. monetary policy accommodation has resulted in substantially low interest rates which have been brought down to near zero levels, while the cumulative fiscal expansion during the period 2007 – 2009 has amounted