so a possible interest rate hike would represent a return to conventional monetary policy terrain. and it is not so much the timing of the interest rate move that matters as the subsequent interest rate path which the fed follows. what would a return to normal policy rate conditions in the united states mean for the euro area and for germany ’ s banks? since 2013 we have observed that policy divergence between the united states and the euro area has had two knock - on effects. first, the differential between us and euro - area interest rates has widened ; second, the euro exchange rate has dwindled. this trend gained traction early this year when the eurosystem announced the large - scale purchase of government bonds. that increased the spread between us treasuries and german bunds and sent the euro plummeting against the dollar. so german banks need to remember that even if the fed raises its policy rates, the spell of low interest rates in the euro area looks set to continue. remember what i said just a few minutes ago – sitting tight and hoping for the best simply isn ’ t an option. and as far as possible exchange rate volatility is concerned, banks might theoretically be exposed to currency risk. two factors play a role here. the first is banks ’ funding gap in dollars. that gap measures the excess of a bank ’ s us dollar assets over its us dollar liabilities. the bigger this overhang, the more exposed the bank is to exchange rate risk. the second factor is the bis central bankers ’ speeches mismatch between the maturities of assets and liabilities denominated in us dollars. this maturity mismatch measures both exchange rate risk and interest rate risk. at the onset of the global financial crisis in 2008, both the funding gap and the maturity mismatch of german banks were very large indeed. when the forex markets dried up and german banks got cut off from us dollar funding, the central banks had to step in and lend a helping hand. since then, the ecb, to name but one, has been providing swap facilities, but the take - up now is virtually non - existent. german banks have reduced their vulnerability since those days, slashing their funding gap by downsizing their stock of us dollar assets. what remains substantial, though, is the scale of the maturity mismatch of their us dollar investments. however, the actual risk exposure here is relatively small, because german banks these days are much better hedged against currency risk

lee hsien loong : asean - the way ahead speech by mr lee hsien loong, deputy prime minister of singapore and chairman of the monetary authority of singapore, at the opening ceremony of the asean finance ministers meeting ( afmm ), singapore, 7 april 2004. * * * finance ministers of asean member states the asean secretary - general ladies and gentlemen let me first welcome all of you to singapore for the 8th asean finance ministers meeting. introduction in 1997, asean was hit by its worst - ever economic crisis. the asian financial crisis dealt a severe blow to all of us. one after another, our countries succumbed to the flight of capital and investors. several economies were on the verge of collapse. before we could fully recover from the crisis, we were confronted again with yet another shock, this time a global economic downturn. the september 11 attacks in america followed shortly. more recently, asean was hit by sars and the avian flu. asean has taken quite a few hard punches in the last few years. although we might have been bruised, we are far from being knocked out. asean countries strived to repair the damage, to recapitalise banking systems, to restructure companies in difficulties, and most importantly to restore confidence. despite the setbacks, asean countries continued to embrace globalization. we continued to look outwards, do our best to attract fdi, liberalise trade, and broaden our linkages with the outside world. now most asean economies are on the mend. economic growth has been strong in many countries. exports are growing, and stock markets are up. as a regional grouping, we have continued to integrate our economies while individually pursuing restructuring. asean is now back on its feet, up and running again. the necessity of deeper integration the need to broaden and deepen economic co - operation is a necessity recognised by asean more than ten years ago. in 1992, asean started the asean free trade area ( afta ) to boost intra - asean trade and establish the region as a common area for manufacturing operations. at that time, the catalyst for greater integration was globalisation. competition was getting tougher. europe was consolidating and integrating itself to form the single european market. in north america, the us, canada and mexico were preparing to form the north america free trade area ( nafta ). nafta provided us manufacturers an attractive, low cost manufacturing base in mexico. mexico too expected to benefit from new investments from