maintaining financial system stability as well as to prevent international systemic risk from emerging, mutual cooperation and coordination have become increasingly essential among central banks in the region. in this context, a forum called emeap, composed of central banks in the east asia and pacific region, was established in 1991. in this forum, member central banks have been exchanging views and information regarding economic, financial market, and foreign exchange market developments. they have also been studying ways to make improvements in such areas as financial markets, settlement systems, and bank supervisory methods. conclusion in closing, let me briefly touch upon japan ’ s role in asia. given the size of its economic presence and close relations with countries in the asian region, japan should make an appropriate contribution to regional development. to this end, first of all, japan itself must aggressively implement structural reform to realize robust economic fundamentals. at the same time, japan should promote further opening and improvement of its domestic markets to contribute to the efficient and fair allocation of world resources. particularly in financial markets, various measures for improvement have been effected. for example, in the benchmark government bond market, the maturity of bonds has been diversified and the withholding tax on non - residents lifted. we should continue such efforts to make domestic markets more attractive for overseas investors. through such efforts, i believe and sincerely hope that countries both within and outside the asian region will come to have greater confidence in japan, which, in turn, will contribute to closer and stronger cooperation in asia.

fact, the speed of regional cooperation in asia has been slow compared to other regions. however, it is also true that the extent of interdependence has become more widespread and deep as witnessed by the progress of the horizontal division of labor and increased capital flows in east asia. in addition, since the bitter experience of the currency crisis in 1997 has made us recognize the risk of spillover and contagion, i believe that momentum for actively promoting regional cooperation as a device to support globalization has steadily increased. in promoting regional cooperation, let me offer you three important points in the economic and financial area. first is the strengthening of mutual surveillance. it is a major premise for any regional cooperation that the countries concerned share a common recognition with respect to the economic and financial conditions of individual countries in the region, their interdependence, and the risks inherent in the regional economy. second, countries in the region should share a common view of the future direction of the regional economy and also concrete policy response based on such recognition. bearing in mind the lessons we learned from the currency crises, we should improve the functioning of financial markets and foreign exchange regimes, and also strengthen domestic financial systems and financial supervisory frameworks. in order to make an appropriate policy response, not only coordination among countries in the region but also competition among them are very much needed. third is participation in global efforts toward the stability of the international financial system, which is often termed the “ new international financial architecture ” problem. it seems to me increasingly important to send a coherent message from asia to such international fora as the financial stability forum, the group of twenty finance ministers and central bank governors, and the international monetary and financial committee. having said all this, we should never forget the importance of maintaining the basic philosophy of “ open regionalism ” as a major underlying premise to contribute to the stability and development of the world economy. central banks also play a very important role in promoting regional cooperation. as symbolized by the rapid expansion of derivative transactions, we now live in a world where international capital flows have become extremely complex and the speed at which a shock is transmitted across borders has accelerated. in such a world, it is not possible for the central bank of any one country to ensure integrity of the international financial system. this can be easily understood if we recall such problems as the liquidity risk involved in foreign exchange and the herstatt risk in cross - border settlements. to discharge the responsibility of conducting appropriate monetary policy and