we currently face in this region. this is not a time for complacency, but it is perhaps useful to step back for a moment from present difficulties to reflect on how far we have come, as a region, in the past fifty years. fifty years ago most of this region was still recovering from the devastation of world war two ; many countries were to face more upheaval in the years that followed. but over the last few decades the region has, through a variety of economic strategies and in differing degrees, enjoyed growing prosperity, greater stability, advancing crossborder co - operation, and, increasingly, freedom from the poverty and strife that confronted earlier generations. this has all been achieved in a context of globalization and economic liberalization. the current turmoil has interrupted some of this progress, and has reminded us that rapid economic expansion is not without its risks. the damage to some economies has been severe. but the foundations remain strong, and the prospects for the next half - century are, in my view, favourable ones. the signs of economic revival are already with us. recovery may be a – 10 – longer and more difficult process than some of us had expected a year or more ago. but there is no doubt that it will come. it is now up to us, as partners in this large and diverse region, to seize the initiative, and turn that recovery into an enterprise that will make us stronger, more cohesive, and more capable of managing the stresses and uncertainties that a global financial system must inevitably produce. * * *

anchor currency for our region. this is a long - term possibility, but it would have the advantage of reflecting the strong trade linkages in the region. it would also create bigger and more liquid markets that are less susceptible to manipulation. it would also help address problems of intermediating financial resources within asia. at present, asia ’ s central banks invest massive amounts in foreign securities, particularly u. s. dollar assets, only to see volatile funds flow back to the region from overseas markets. by investing reserves directly in asian financial assets, this type of costly and unstable recycling through developed markets could be reduced. there are, of course, many obstacles in the way of creating an asian currency unit. the various economies of the region operate under widely differing economic regimes, and are at different stages of development. an institution would be necessary to administer the system, and the politics involved would doubtless be very complex. but i believe that now is a useful time to raise this topic for discussion, at least at an intellectual level : successful implementation in the longer term would go a long way towards addressing the currency instability we have seen in the region over the last year and a half. after all, it has taken the more homogeneous europe fifty years to bring the euro into existence. a further long - term solution lies in the development of stable and transparent debt markets in the region. the excessive reliance in asia on short - term financing from overseas lenders through weakly regulated banking systems, and all the turbulence that this has entailed, is a reflection of the lack of deep and diversified debt markets in the region. the essence of the problem is the failure of our financial systems to keep pace with the strong underlying growth in other sectors of the asian economies : the industrial and trade sectors surge ahead, while the financial sector lags behind. too large a share of asia ’ s financial resources has consequently been recycled through overseas markets, with the inevitable loss of information flows, and a tendency towards the kind – 9 – of market volatility that has caused us such problems. we need to establish local debt markets that bring both borrowers and lenders into more direct and long - term relationships, and which leaves both sides less exposed in terms of currency and maturity mismatches. ironically, the underdeveloped state of our debt markets is attributable in part to the traditional absence of large budget deficits in most of the region, which has limited the development of government bond markets. debt market development