For example, in the areas of project finance and trade finance, the Asian region has continued to depend considerably on foreign financial institutions, particularly European banks. In fact, in the wake of the European sovereign debt problem, net capital outflows were observed from August to December last year, except in October. Recent data suggests that capital flows returned to the region in January.
As such, Asian financial markets have suffered from high volatility caused by the development of global capital flows, which is more or less the same problem they experienced in the Asian Financial Crisis. The background to this is that the market infrastructures, such as those of bond markets, remain less developed.