Apart from the historical context, last year there were a couple of big events that reminded me of the strong linkages that exist within Asia and across the Pacific. The first one was the tragic Great East Japan Earthquake. This massive earthquake severely damaged supply chains of manufacturing of Japan (Chart 3).
One effective method might be to allow institutions to count such instruments as capital. 18  Flannery, M. J. (2005), “No Pain, No Gain? Effecting Market Discipline via 'Reverse Convertible Debentures',” Chapter 5 of Capital Adequacy beyond Basel: Banking, Securities, and Insurance, edited by Hal S. Scott, Oxford University Press, 2005. 19  Hart, O., and L. Zingales (2009), “To Regulate Finance, Try http://experts.foreignpolicy.com/posts/2009/03/30/to_regulate_finance_try_the_market.