In thinking about the growth agenda, we need to pay particular attention to both the potential capital flows and the movements in domestic liquidity, as these are closely related to maintaining stable monetary conditions. Europe is said to be deleveraging. As central Europe deleverages away from peripheral Europe, it is likely that at least some of the funds would be headed towards Asia.
However, if core Europe deleverages absolutely, then we might see a liquidity squeeze, not only in Asia but across the globe as well. Capital flows impact exchange rates, interest rates, trading volumes and future demands on currency withdrawals. These are not small concerns, as these can quickly become the stimuli for systemic risk. The BSP is thus always watchful.