whole in the long run. these elements are important for achieving a process and outcomes that will be sustainable. the modernization of asian financial systems during this period has also been accompanied by significantly strengthened regulatory and supervisory frameworks, improved financial safety nets, more effective surveillance of financial stability risks and stronger legal underpinnings. these reforms supported the transition towards more market - oriented financial systems that are anchored in stronger institutions, risk management capacity and governance. today, our financial markets are better able to intermediate volatile financial flows and our financial institutions are supported by stronger financial buffers to withstand adverse developments and shocks. significant strides also continue to be made in strengthening consumer protection frameworks, promoting financial inclusion, and enhancing market discipline. these developments continue to support the region through the recent episodes of turbulence in the global financial markets. the region has also made important strides in enhancing monetary and financial cooperation arrangements to address regional financial stability issues and global policy spillovers. much has been accomplished in the areas of surveillance arrangements, financial safety nets and crisis prevention, management and resolution. we have already experienced the important benefits of having these arrangements in place as the region came together to respond where needed to events that were unfolding during the global financial crisis. the authorities in the region remain committed to build on these foundations to bring regional cooperation to higher levels not only to reap its benefits but to also preserve financial stability in the region. in this effort, the current priorities for cooperation include improving information flows on risk assessments ; advancing regional financial infrastructure and capacity building ; and providing a regional voice on key international developments that may affect the region. as financial integration gains pace, the demand will increase for greater convergence in regulatory and supervisory approaches and standards, including their implementation across borders. an important objective of such regulatory convergence is to ensure that crossborder financial linkages act to foster regional growth, while mitigating the propagation of systemic risk across borders through such linkages. the convergence of standards has proceeded in different ways in different parts of the world. in europe, regulatory convergence has been driven by eu - level bodies and agencies, including the european system of financial supervisors and the european systemic risk board. the eu - wide prudential rules are formulated and implemented through directives and regulations legislated by the european parliament and european council, with limited room for member states to apply “ national discretion ”. recent proposals to establish a single supervisory mechanism for banks led by the european central bank, and a single resolution mechanism, will further bis central bankers

buffers. an important precondition for financial liberalization and integration in the region has been ensuring that we build the capacity and financial infrastructure that would enable us to respond to emerging risks while also minimising their contagion effects. the recent global financial crisis and its aftershocks remind us that these lessons remain relevant and that we need to stay firmly on course in strengthening our foundations and resilience. a gradual and phased approach to financial liberalization and integration has served the region well, allowing time for the building blocks to be put in place, and flexibility to set the pace at which our financial systems can continue to grow and expand in line with the capacity to manage the attendant risks of a more open and interconnected financial landscape. to date, financial integration in asia has mainly manifested itself in the form of the increased regional presence, with increase participation of indigenous asian banks in the regional financial system and increased participation in regional financial markets. the prospects for such greater regional financial integration are significant given that large flows of capital currently continue to be directed to developed economies outside the region. this is in contrast to the trade patterns in the region where intraregional trade flows account for more than half of total trade in the region. promoting greater financial integration in asia will not bis central bankers ’ speeches only serve to reinforce economic integration, but also enhance the depth and breadth of asia ’ s financial markets, contribute to the development of more sustainable funding sources for economic development, and potentially improve terms of trade by reducing transaction and information costs. the strategy and path towards greater financial integration in asia seeks to preserve the strengths inherent in the diversity of the region, while raising the standards which promote financial stability in the region. recognizing the various stages of development across our economic and financial systems, the asian financial integration model for the ten asean economies is focused on : ( i ) strengthening preconditions through collective capacity building to promote more open market access ; ( ii ) progressively reducing barriers to facilitate crossborder trade ; ( iii ) developing the market infrastructure and an enabling environment to promote the efficient and effective intermediation of cross - border financial flows ; and ( iv ) establishing appropriate safeguards for financial system stability. two distinct elements of this process are important. the first is that it allows for different speeds of integration depending on the state of readiness of respective member countries. the second is the commitment of members to support each other in developing the preconditions that would make financial integration viable for the group as a