i ’ d like to highlight. what has been done and what more needs to be done effective surveillance : being good global citizen one of the immediate responses to the crisis has been to strengthen effective surveillance capacity at national and international levels. we are of course on the right track in this effort to create a more robust and effective surveillance system with a view to ensuring timely policy actions. tackling the problem at an early stage not only helps lessen the chance that micro shocks can adversely affect the macroeconomy, but also safeguards against spillovers from one country to the rest of the world. in today ’ s globalized world, this spirit of good global citizenship is essential. hence, on financial sector surveillance, i support the idea that all systemically important economies need to participate in financial sector surveillance or fsap, including the stress testing, to support the global surveillance objectives. as for the overall global surveillance, we need more effective role of the ifis, in particular the imf. effective surveillance means the capacity to ensure right policy actions by the public sector and sufficient risk awareness and management by the private sector so that policies and market responses generate positive feedbacks. underpinning effective surveillance is of course the credibility and legitimacy of the governance structure of the ifis. in this regard, i believe that we all need to be sincere in pushing for continued improvement of the imf for it to be a truly credible and effective organization for surveillance. dealing with the inherent instability : developing deep and broad financial markets and a multi - currency system i ’ d like to emphasize that even if we have achieved all the above and embraced good global citizenship, it is almost certain that there will be the next crisis. but, hopefully, this will not happen in the immediate future, and it will perhaps come from different sources of vulnerabilities. so, it is imperative that both the public and the private sectors remain very vigilant and risk - focused in identifying the changing nature of risks and new sources of vulnerabilities. the last point i ’ d like to touch upon is on the vulnerability in the current international monetary system. let me return to the triffin dilemma discussion mentioned earlier. as the issuer of an international currency can take advantage of its special status to overly stimulating domestic demand, this leads to excess liquidity in global market and can undermine the stability of the international monetary system in the end. however, whether the current vulnerability in the international financial system lies in the tri

##ffin dilemma or policy blunder is an on - going debate. regardless of the nature of the vulnerabilities, it is clear that there have not been enough high quality financial assets in relation to financial investors ’ demand. this is a factor that no doubt has contributed to the underpricing of risk and more importantly, a high degree of concentration in us financial assets, which have the most liquidity. this point is especially important because when the global economy resumes its normal path and when emerging market economies further accelerate their growth and development, it is without doubt that wealth will once again accumulate. this will result in greater global resources searching for investment in global financial markets. therefore, i believe that there is a need to have more financial and capital markets that are deep and broad enough to have the acceptance of investors to help absorb the increased wealth and provide alternatives for quality investment globally. looking around, some emerging market economies are certainly in a good position to further develop their financial markets in that direction. this is consistent with the concept of risk diversification. over the longer term, the instability, whether inherent or not, would decline if we have more developed financial and capital markets and also, by default, a multi - currency system as they reduce the risk concentration on one individual financial market and currency. conclusion in closing, i believe that policymakers over the world need to focus our effort on all aspects of policy challenges in parallel including surveillance, financial market developments, regulations, and risk management. i strongly believe that market players respond to policy incentives and therefore policymakers have the responsibility to put the right policy and incentives in place. there is no quick fix and it will take a long time and painful adjustment before countries that were at the epicenter of the global crisis can resume normalcy. in asia, we have taken a decade to strengthen our economic resilience. because of our past efforts, we have been able to weather this crisis relatively well. that said, our work in asia is still ongoing to strengthen the policy framework and tools to deal with future crisis that will surely not be the same as the last. importantly, we are mindful that the world will have much less fiscal space to cushion potential global contraction, should the next crisis hit. while it may be easier to advance these efforts at the national level, achieving policy coordination on the global level will be much more difficult. time, spirit of cooperation and good global citizenship, as well as maintaining policy and risk focus will be essential for all