Monetary policy has been contributing decisively to fostering sustainable growth by having established an environment of price stability and by ensuring that medium to longer-term inflation expectations remain solidly anchored at levels consistent with price stability. And this is what our policy will continue to do.
We also find ourselves somewhat stuck with recycling a large part of our savings through the developed markets back into the region in a much more volatile form, occasionally creating havoc in our monetary and financial systems.1 The challenge for Asia then, according to its own financial leaders, is to develop a financial system which can allocate local savings to local needs more directly, can be resilient to the risks associated with international capital flows, and be somewhat less dependent on banks as a funding channel.