regulatory framework, and iv ) the improvement of the relevant infrastructure for the bond market. 2 owing in part to these projects initiated by the regional authorities, the asian bond market has developed steadily, although still not deep enough and varying across jurisdictions. the second is a project aimed at building a mutual framework of foreign currency liquidity provision in times of crisis, called the chiang mai initiative ( cmi ). the cmi started building a bilateral currency swap network in the region, which involves a contingent claim on foreign currency reserves held by each asean + 3 authority. the cmi has since enhanced its effectiveness by increasing its size and the number of participants. 3 the authorities are discussing expansion of the scope to cover crisis prevention, as well as to assess the sufficiency of the size. to ensure the effective implementation of crisis prevention and liquidity support in times of crisis, it is essential for the authorities to monitor closely the regional economy and financial markets, and exchange their views on respective macroeconomic policies. the asean + 3 authorities thus established their own but independent surveillance unit, called the asean + 3 macroeconomic research office ( amro ), in singapore in april 2011. in addition, the toplevel finance ministers ’ meeting will be expanded from 2012 to include the region ’ s central bank governors in the finance ministers ’ and central bank governors ’ meeting. remaining challenges however, challenges remain. although there have been improvements in some areas, as i have mentioned, i would like to raise the following five points. ( 1 ) to solve double - mismatch of currency and maturity the first is about the double - mismatch of currency and maturity. this structural issue has not changed fundamentally in the past ten years. according to bis statistics, cross - border credit denominated in local currencies from foreign banks to local residents has grown rapidly in the 2000s ( chart 2 ). however, their reliance on foreign currencies is still large. fundamental vulnerability continues to be found also with respect to maturity mismatch, although the mismatch has reportedly been improving to some extent. 4 ( 2 ) to change bank - centered financial structure and high reliance on foreign institutions second, the bank - centered structure of the financial intermediary function also remains basically unchanged. moreover, asian region ’ s funding relies heavily on foreign financial has steadily been recognized by investors, although the extent of this recognition varies across the markets. moreover, the fund has been functioning as a catalyst for improving market infrastructure, such

arrangement ( cbca ) made between the bank of japan and the bank of thailand in november last year has the potential to be expanded throughout asia. in fact, at almost the same time, a cbca was announced between the bank negara malaysia and the monetary authority of singapore. meanwhile, the emeap formed an action group, and has been discussing the promotion of cbcas within the region. ( 4 ) to foster financial innovation the fourth challenge is to develop innovative financial products, appropriate for an aging population in the region. in asia, the population is aging at a steady but faster pace, not only in japan but also in other economies such as china, korea, and thailand ( chart 6 ). financial innovation is therefore essential to offer a flexible variety of enhanced financial products appropriate to the particular stage in the life cycle of the population. in this regard, the development of securitization seems a key factor. i recognize that securitization, especially in its complex forms, has suffered from a negative image since the lehman shock. however, simple, plain - vanilla type securitization products may contribute to the realization of appropriate risk - adjusted returns on financial transactions including lending, leading to more active operations of financial institutions. moreover, as the credit intermediary channel becomes multi - layered to complement conventional lending, the risk tolerance of the financial system would be enhanced through risk diversification. thus, it is important to “ reinstall ” useful securitization technologies into the system. in this regard, let me mention, for example, asset - based lending ( abl ), which is collateralized lending based on business assets held by firms. by utilizing effectively a variety of their assets, firms do not have to rely on conventional real estate collaterals and personal credit guarantees when borrowing. abl is particularly useful in providing opportunities for firms at different stages in their life cycles, such as during start - up, business expansion, and business transformation, when it is difficult to obtain sufficient financing through conventional in japan, although the amount outstanding of corporate bonds has been increasing, the market size continues to be limited compared to that of government bonds, and we have to admit that the market liquidity is low. there are also a limited number of issuances of corporate bonds with non - investment grades, which has long been an issue in japan. against this background, market participants established the “ forum on the activation of corporate bond market ”, and have been discussing a number