Ladies and Gentlemen, The theme for today's Public Lecture: "Monetary and Financial Policies in the Asian Network Economy" is indeed timely and highly relevant, in the current regional and global environment. The Asian economies have always been highly integrated into the global economic and financial network. Indeed, the success of the Asian economies lies essentially in its ability to be highly networked. The nature of these networks however, has evolved over time, heightening the complex nature of the interlinkages. In this recent decade, this trend is being reinforced by the intensification of regional integration. It is being facilitated by increased liberalisation and the increased potential for complementarities in the region. It is also driven by the conscious efforts by the authorities to facilitate the integration process. This is premised on the potential for increasingly mutually reinforcing positive outcomes. There is a growing recognition of the need for enhancements to the institutional arrangements and regulatory and legal framework to better manage the risks and vulnerabilities associated with the network economy. In this regard, an enhanced understanding of the changes in the way financial markets and payment systems operate in a more connected environment becomes important. As part of this process is the support provided by an enhanced surveillance mechanism. A further implication of a more networked economy is i n the area of payments, clearing and settlement systems, in which the benefits are derived from the economies of scale and the positive network externalities of increased participation.
To ameliorate the impact of bank balance sheets shrinking, companies are using technology to experiment with bringing buy-side liquidity into secondary markets. The challenge, as many have observed, is how these solutions can help to maintain liquidity in times of market volatility. 15 Second, companies are staying private for longer. According to McKinsey, in the US which drove the dot-com boom and is driving the “unicorn” and “decacorn” phenomenon, the average age of technology companies going public in 2014 was 11 years, up from 4 years in 1999 13. This has been enabled by the prolonged period of low yields, which has driven institutional investors to seek higher returns from liquidity and credit risk in private markets. McKinsey also found that 150 software companies were able to reach USD 10 billion in value through private financing in 2015, compared to just 10 in 2011. In Singapore, private equity assets under management grew 24% per annum on average for the last five years to over USD 100 billion in 2015. This creates a role for industry bodies like ASIFMA, which are set up around public markets like credit and equity, to support companies on their longer journey in private markets, and introduce the benefits of market transparency and market discipline while the companies remain private. 16 Third, underlying macro trends are supportive of investment continuing to flow from Developed Markets to Emerging Markets. On the one hand, accommodative monetary policies in developed economies will drive an ongoing search for relative yield in emerging markets, including in Asia.