are completed, a critical factor determining the vibrancy of bond markets in the asian region, as in any region, will be the quality of countries ’ policies. this starts with macroeconomic policies aimed at fiscal sustainability and price stability - where asia generally has an exemplary record. it will include strong efforts at financial supervision - an area where a number of countries need ongoing development. it will also involve, in my view, the willingness of individual countries and their governments to allow markets to set prices and to play a major role in the allocation of funds - something some countries in the region have been less comfortable doing up to now. most likely, countries will need to allow foreign firms to participate actively in market trading activities in order for market making behaviour to flourish in key markets. australia ’ s experience is that the “ embrace of the market ” in this way can, on occasion, be uncomfortable. markets will routinely react, and on occasion over - react, to government policies and other things which occur in the economy. sometimes the market ’ s reaction is uninformed, unfair or just plain wrong. but over the longer run, vibrant, if on occasion volatile, financial sectors do confer worthwhile benefits on an economy. they are not in any sense a magic bullet to achieve prosperity, but the evidence is fairly clear that properly functioning financial sectors do contribute to better growth. that is a not inconsiderable benefit to the firms, governments and citizens of the countries concerned. executives ’ meeting of east asia - pacific central banks. details of this group ’ s composition, history and work can be found at http : / / www. emeap. org. see http : / / www. emeap. org / press / 02june03. htm. see http : / / www. emeap. org / press / 15apr04. htm.

ewald nowotny : the rebalancing challenge in europe – perspectives for central, eastern and southeastern europe opening remarks by prof dr ewald nowotny, governor of the central bank of the republic of austria, at the conference on european economic integration ( ceei ) 2014, vienna, 24 november 2014. * * * your excellences, dear governors, ladies and gentlemen, i am delighted to welcome you to the annual conference on european economic integration ( ceei ) hosted by the oesterreichische nationalbank. thank you for coming to vienna. many of you have traveled long distances to be with us today – a fact that highlights the importance of the topic we are going to discuss over the next two days : “ the rebalancing challenge in europe – perspectives for central, eastern and southeastern europe ( cesee ). ” what do we mean by “ rebalancing ”? obviously, the term signifies a readjustment from a state of imbalance – an economic imbalance in our case. typically, economists distinguish between external and internal imbalances. by external imbalances, they usually mean disequilibria ( mostly deficits ) in the current account which, if protracted, might lead to an unsustainable net international investment position. the underlying reason for a current account deficit can differ from case to case ; it can be trade - induced via export weaknesses, indicating a lack of competitiveness ; it could also reflect strong import demand due to unsustainably high growth. this leads us directly to internal imbalances, which comprise accumulated private and public debt, asset price bubbles, unemployment or excessive inflation ( or deflation ). one could also add sectoral or distributional imbalances contributing to uneven growth. internal and external imbalances are often interlinked, but their interrelation is not always clear - cut. this year ’ s ceei coincides with three anniversaries, which are crucially linked to our conference topic : 25 years since the fall of the berlin wall, 15 years since the creation of economic and monetary union ( emu ) and 10 years since the – so far – biggest round of eu enlargement. this is not only a reason for celebration but also an occasion for honest stocktaking and thoughtful reflection. i think that the developments that followed these events have been broadly successful. for an overwhelming majority of europeans, the last quarter of a century brought hugely improved living standards