6  BIS Review 169/2010
On this, I see substantial scope for the pace of financial integration in East Asia to be gaining more momentum going forward as the constraints that used to limit the pace of integration begin to unwind. First, the external positions of the economies in East Asia have now become much stronger, with current account surpluses, substantially lower external debt, and larger international reserves. Second, Asian savers themselves increasingly want to diversify their savings abroad in search for better yields while Asian firms also look for better opportunities to lower their costs of fund by tapping funds from external sources. Reflecting these two factors, we are seeing a reorientation of policy in the region to make cross-border capital outflows more liberal without compromising the risk on macroeconomic stability. And the third factor is that Asian financial institutions are now back in good health after a period of restructuring and consolidation. So, we are likely to see Asian financial institutions becoming more active in intermediating cross-border capital flows within the region, as they explore new business opportunities based on their expertise and knowledge of the region. All these factors, I think, will set in train a stronger momentum of cross-border capital flows within the region in the period ahead. And under such circumstances, what then should be the role of policy? Government policies, in my view, have played an important role in the development of East Asian financial markets.