This effort should be expedited to provide issuance flexibilities and accelerate intra-regional cross border issuance. Much has been discussed and deliberated on this subject matter. It is timely to put idea into action. The benefits are significant, as ASEAN issuers will be able to raise long-term domestic currency funding not only from their onshore investors but across the region. Issuers would have access to a wider base of investors. A wider source of funding would also potentially enable them to better match funding and investment needs. Such a framework would also expedite the issuers’ compliance with regulatory process, leading to a shorter time to market, which would result in more reasonable cost issuance. Another bold step is to recognize the credit rating given by the domestic credit rating agency for domestic currency bond or sukuk issuance. Such recognition ought to be given should the rating agency had long enough credit cycle to prove its rating reliance. Domestic rating agencies have better local knowledge and insights. The rating methodologies are similar, technical model-driven and back tested. In addition, most domestic rating agencies have international partners for technical assistance, standard and quality assurance. Before I conclude, there are some ideas that could contribute to the further integration of our fixed income markets. Firstly, a crucial driver for greater financial integration is the availability of efficient and effective financial intermediaries. We should look to enhance and better connect the network of intermediaries in the region as it would support the development of a strong and integrated market.
Therefore, in the second part of my intervention, I would like to explore in more detail some of the most important recent trends and developments in risk management theory and practices, and also the impact that these developments can have both on individual firms and on the economy as a whole. I will cover three trends in particular: firm-wide assessment of risk, risk aggregation and risk transfer. This will lead me to the third part of my intervention: the challenge of devising a supervisory response which harnesses these developments for the benefit of financial stability. As I will argue, it is critical to ensure that our supervisory and regulatory structures are compatible with the best practices in risk management today. But I believe that our structures must go beyond that and actually encourage firms to continue to improve their measures of risk exposures and their approaches to mitigating them in the future. This forward-looking approach forms the basis of Basel II. In the final part of my intervention, I will explore some of the implications of Basel II that received some attention in recent times: namely, the potential impact of the new framework, both on capital flows and on global competition. My purpose today is not to describe Basel II in detail, but rather to highlight the dynamic processes that it stimulates.