economies vulnerable to shifts in capital flows. the impact of sudden stops were amplified, causing the currencies to devalue and the cost of servicing the external debt to escalate, leading to a vicious cycle of default and instability. capital flows to the region went from a usd93 billion inflow in 1996 to a usd12 billion outflow in 1997. as a consequence, growth of the economies in this region contracted between a range of 16 % and 10 %, a big contrast to the robust growth of 7 % in the period before 1998. since then, emerging asian economies have learnt their lesson. the reliance on external financing was reduced. sources of domestic financing were diversified through the development of the domestic bond market. regional bond markets have expanded significantly. the region has replaced foreign currency borrowings with local currencies and addressed the inherent weaknesses in currency mis - matches in funding. however, there are unintended repercussions. an open and well - developed bond market attracts non - resident participation and the diversity of market players is said to enhance market liquidity. however, we have discovered that beyond a certain threshold the presence of non - residents participation is a source of instability. the higher the participation of non - residents in the bond market, the more vulnerable the market is to volatile portfolio outflows. so it is said that with history, if we learn it well, will not repeat itself. nevertheless, sometimes lessons in history are cloaked in apparent success. the 2008 global financial crisis and corresponding policy responses by major central banks caused risks not seen before. in the periods after, unconventional monetary policy and a prolonged period of low interest rates had negative spillovers to emerging markets. this was notably evident through the waves of volatile capital flows in large magnitude. these flows were drawn by the search for yields, and ironically coincided with a significant expansion and development of our financial markets, a key reform measure following the afc. the region was once again at the mercy of global easy money, flattered with an overvaluation of asset prices and domestic financial market exuberance. as these capital inflows mainly originated from the advanced economies, regional financial markets became increasingly exposed to their vagaries. take the taper tantrum for example, which exemplifies how fragile the region ’ s fate is when just a hint of the us fed possibly tapering its asset purchases was sufficient to trigger massive 2 / 5 bis central bankers'speeches capital outflows from the

jessica chew cheng lian : remittance flows – benefitting lives in malaysia and abroad remarks by ms jessica chew cheng lian, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the closing and handover ceremony of project greenback 2. 0, johor bahru, 30 november 2017. * * * two years ago, on this very same stage, governor muhammad ibrahim set out two specific outcomes for project greenback 2. 0 here in this beautiful city of johor bahru. first, to further improve on the costs of remittance transactions for individuals and businesses, and second, to help consumers make better and more informed decisions. today, the results speak for themselves. the average cost of remitting funds * in johor bahru is now around 2 %, compared to above 3 % before we started the project. the use of authorised money services business providers to conduct remittance transactions has increased by 21 % in value terms on an annual basis for the period january to october 2017 against the corresponding period in 2015, offering better protection to customers while safeguarding the integrity of our financial system. of this, remittances by smes using more cost - efficient formal msb channels has more than doubled. this increase has also outstripped the growth in remittances for the industry as a whole as a result of initiatives under the greenback project. over 35, 000 migrant workers and 3, 700 smes were engaged to increase awareness and promote the use of formal remittance services through more than 40 education and outreach programmes organised over the last two years. this is an impressive outcome, made possible only by commitment, enthusiasm and exceptional cooperation that has been shown by the project team and all our partners who are here today throughout these last two years. i am well aware of the numerous logistical and communication challenges that had to be overcome by the team and the industry, and the persistence that it took to break long - held perceptions before we were able to build momentum in our outreach efforts to deliver these results. so let me on behalf of bank negara malaysia, join faris in extending my congratulations to all who contributed to this important initiative. we are especially grateful to the world bank for working with us to bring the greenback project to johor bahru – the first champion city in asia, and for providing technical support in the project ’ s design and implementation strategies. it goes without saying that we could not have done this