These new asset classes serve to reduce vulnerabilities and recycle some of the regional savings for the development of regional financial markets; ii. Putting in the necessary supporting infrastructure is critical to facilitate the development and readiness of our markets to accept multi-currencies. This is the basic idea behind the signing of the currency swap arrangements with the People’s Bank of China and Bank of Korea to promote greater usage of renminbi and korean won ; and iii. In December 2016, Bank Negara Malaysia signed Memorandum of Understanding (MoUs) with Bank Indonesia and Bank of Thailand to promote the settlement of bilateral trade and direct investment using domestic currencies. An established Operational Framework will pave the way for wider usage of local currencies in support of closer integration under the ASEAN economic community. 4/5  BIS central bankers' speeches  Conclusion, the need to re-engineer the international monetary system The current international monetary system needs to be re-engineered. Our past experiences have proven that the current system is unstable, prone to shocks and broken. Stakes in the international monetary system are far too high to be beholden to conventional thinking and status quo. Like Japan and its buildings, we must continue to find innovative ways to strengthen the structure of the international monetary system. Such re-engineering efforts may unseat us from our comfort zone. It will certainly invite resistance and may even cause some temporary disruptions. But standing still is the costliest option, as we would be stumbling from one crisis to another.
In recent years, however, this sort of consideration has not played such a prominent role. There are several interrelated explanations for this. Monetary policy thus far has been aimed to a great extent at establishing a regime of low inflation and engendering understanding for it. In practice, the scope is also limited for monetary policy decisions of a fine-tuning character by the uncertainty that prevails, inter alia, about future developments and by the degree of credibility for the low inflation policy. 2. Uncertainty and Credibility There are various kinds of uncertainty that in practice play an important part in monetary policy and are also important for the speed and scale with which changes in interest rates are made: - One type of uncertainty has to do with the economy’s basic mechanisms.. Which model of the economy shall we use for our analysis? A major problem here in recent years has been that the shift to low inflation and a flexible exchange rate by itself can change the relationships in the model. - A second type of uncertainty concerns the interpretation of new information that is constantly coming in. It is important in this connection to assess what effects an interference or a shock have, which, inter alia, is linked with whether it is permanent or temporary. - Finally there is uncertainty about the effect of the measures that the Riksbank can take--in practice, changes in the instrumental interest rates.