as ‘ risk on, risk off ’ behaviour – and while this facilitates external financing in periods of elevated risk appetite, it can also reduce domestic policy autonomy. in fact, in a world where more conventional monetary policies are in place, financial risk may be priced more accurately, resulting in proper market rewards for good policies see ‘ are countries losing control of domestic financial conditions? ’ in the global financial stability report, published by the international monetary fund in april 2017. page 4 of 8 – an incentive for policymakers to implement prudent policies. a reduced role for cross - border capital flows, or a lower level of dependency, could also provide more protection for emerging markets in periods of a global crisis, as it would reduce the risk that advanced economies ’ fund managers and banks would withdraw their investments or loans in a rush. in fact, this might greatly reduce the risk of financial crises, as international financial exposure is managed in a more risk - conscious manner. at the same time, a lesser degree of financial globalisation could help to reduce global imbalances. sizeable cross - border reallocation of capital allowed the persistence of large current account deficits or surpluses in some countries which posed threats to global financial stability. in some countries, capital inflows have exceeded financing needs, and are either being recycled into excessive domestic credit growth or forcing authorities to accumulate sizeable and costly foreign exchange reserves. in other countries, large deficits fuelled strong increases in external liabilities, endangering macroeconomic stability and putting sovereign ratings at risk. 5. role of international organisations and regional financial cooperation it is important, however, to recognise that the optimal economic development of emerging countries is still likely to require access to international financial markets. however, these countries may increasingly have to seek such opportunities within the emerging region itself. with regard to financial coordination, there are two issues that have a strong bearing on vulnerabilities in the international financial architecture that require global action from international organisations such as the international monetary fund ( imf ) and forums such as the g20. the first issue relates to the management of capital flows. the gradual liberalisation of capital flows in countries with large external surpluses provides additional scope for the foreign financing of emerging economies. however, excessively volatile capital flows and the related spillover effects remain key concerns for many emerging market economies. in instances where these are accompanied by increased credit extension and posing a threat of increased financial stability risk, a page 5 of 8 sharp focus on

finance ministers and central bank governors ( afmgm ) have unanimously agreed that financial inclusion should be a policy priority for asean. the working committee on financial inclusion, or wc - finc established in april 2016 to carry this mandate forward, has in turn, laid out clear goals to support and accelerate regional initiatives to elevate the level of financial inclusion in asean. wc - finc aims to reduce the average financial exclusion level in asean to 30 % by 2025, and increase the level of infrastructure readiness in asean to 85 % ( currently at 70 % ), based on agreed measures of financial inclusion outcomes and preconditions. particular emphasis is given to capacity building and peer learning. an especially interesting part of this journey has been asean ’ s incredible diversity which provides a rich and broad canvass for drawing lessons from every country on specific challenges faced and measures pursued to increase financial inclusion. for some of us, the geographic barriers to financial inclusion are the most urgent, for 1 / 3 bis central bankers'speeches others, cost or knowledge and trust are more significant barriers. in different ways, we all have something to learn from each other ’ s experience on strategies that worked or did not work so well. this is why we are here today. this forum on financial inclusion was organised in response to technical assistance requests and learning needs of asean countries based on a survey conducted by wc - finc last year. there was particular interest in malaysia ’ s experience and so we volunteered to host this first forum, but clearly, we are also eager to learn from others. the forum focuses on 5 key areas which represent core pillars of a holistic financial inclusion system. the first is the development of a national financial inclusion strategy and monitoring mechanism which are crucial to ensure that strategies are well targeted, coordinated and executed. the second is strengthening of institutions that support the implementation of financial inclusion strategies such as development financial institutions and credit guarantee corporations. third is the importance of having a national focus on sme financing and development as a key enabler for inclusive growth. the fourth area focuses on the role of digital financial services, including fintech and big data, in elevating financial inclusion. and lastly, the forum will turn to the importance of financial education and consumer protection in increasing the responsible take up of financial services and building trust. beyond these practical areas, there is also much to be gained from engaging in more strategic discussions on how financial integration itself can impact the inclusion agenda. more specifically, if we can better