In an environment of accommodative monetary policy, the swift and effective implementation of structural reforms, in line with the 2016 countryspecific recommendations recently approved by the European Council, will not only lead to higher sustainable economic growth in the euro area but will also make the euro area more 2  BIS central bankers’ speeches  resilient to global shocks. Fiscal policies should also support the economic recovery, while remaining in compliance with the fiscal rules of the European Union. Full and consistent implementation of the Stability and Growth Pact over time and across countries is crucial to maintain confidence in the fiscal framework. At the same time, all countries should strive for a more growth-friendly composition of fiscal policies. We are now at your disposal for questions. BIS central bankers’ speeches  3
Exacerbating the downturn is the continued economic weakness in Japan, the second largest market in the region. Reflecting the weak external environment, export growth in many SEACEN economies has fallen sharply. This has also undermined domestic demand. Challenges for Asia Concerns over the slowing growth in the US and the much weaker Japanese economy have hit regional currencies. Since end-2000, regional currencies have seen higher volatility. While the greater flexibility of exchange rates has reduced the risk of large speculative attacks, such fluctuations are not without risk. The challenge facing policymakers is how to ensure the greater exchange rate flexibility does not lead to greater financial system fragility. Aside from macro-prudential risk, financial regulators also faced challenges arising from the rapid changes in the global financial landscape. In particular, advancement in technology, investors' demand for shareholder value and customers' demand for integrated financial supervision have accelerated consolidation and globalisation of financial institutions and markets. The boundaries of the banking, insurance and securities industries are less clearly defined. This calls for a more harmonised and integrated approach to supervision of the financial system. Besides co-ordinating among the different regulatory bodies to address unsupervised risks, overlaps and gaps in their regulatory framework, there may be a need to re-look the way national regulatory and supervisory authorities are organised, to create greater synergies and enhance efficiency. At the international level, efforts are underway to strengthen the architecture of the international financial system.