has involved wide - ranging policies and reforms to promote domestic demand, in particular domestic consumption and investment activities by the private sector. accommodative macroeconomic policies were generally supported by policies and reforms to strengthen the financial system, to ensure that domestic demand was supported by the financial sector. with rising incomes, private consumption and investment activities have expanded significantly to become the major engine of growth in asia. cumulatively, the increase in domestic demand in the region has transformed asia into becoming a huge consumer market. this has also prompted greater inter - regional trade which has become mutually reinforcing on growth in the region. from being export - led, domestic demand has now become an important source of growth. asia is, therefore, now shifting from being global producers to becoming global consumers. the wide - ranging financial reforms in several emerging economies in asia, have resulted in financial intermediaries with strong capital and liquidity buffers, and improved risk management and governance practices. this has allowed for the financial intermediation process to continue without disruption during the recent global financial crisis. the more comprehensive regulatory frameworks have also been complemented by enhanced bis central bankers ’ speeches surveillance arrangements and a relatively more intrusive supervisory oversight. wideranging policy tools, including macro - prudential policies, have been relied upon to mitigate and manage the risks emanating from excesses and the build - up of imbalances in the financial system. the opportunity was also taken by most central banks in the region to normalise interest rates once recovery had commenced. interest rates, while still remaining accommodative, were raised from their historical lows. finally, with more developed financial markets, shocks were now more dispersed throughout the financial system. this has allowed the financial system to better intermediate highly volatile capital flows. despite this, the surges and reversals of capital flows continue to present a major challenge to policy. specific policy strategies have also been adopted to reduce the prospect of being destabilised by these flows. financial reforms following the asian financial crisis have transitioned financial systems in asia towards greater market orientation and increased exchange rate flexibility. this has facilitated greater capacity to adjust to the increased volatility in the financial system. further progress on liberalisation has also increased the potential to undertake foreign exchange transactions, including engaging in outward portfolio and direct investments abroad. this has resulted in stronger two - way capital flows, contributing to more orderly conditions in the financial markets. liquidity management measures, prude

let me conclude my remarks ; the new global policy frontiers are now addressing the challenges of the new global economic and financial landscape. given the more connected and inter - dependent world, the call is for strengthening the cross - border dimension of policymaking. asia has taken advantage of this period of relative stability to advance economic and financial integration, and to strengthen our economic potential. asia will, however, continue to be vulnerable to external developments and future shocks. to be in a better state of readiness to withstand these eventualities, the policy priority is to build resilience. not only having the buffers and institutional capacity, but also to come together collectively to manage the new challenges, and thus be positioned to contribute constructively to global stability and growth. bis central bankers ’ speeches