The first concerns the continuity of the research and discussion processes in the respective areas of central bank cooperation. Continuity helps keep track of the emphases and priorities of regional members and promotes effectiveness of the ongoing collaboration efforts. The second aspect concerns the need to follow through cooperative initiatives that have been agreed upon by central banks in the region. The follow-through can be done effectively through intensified, and perhaps more conveniently organised, dialogue and information sharing. The third aspect concerns the approach towards central bank cooperation. There are many areas of common areas of interest among regional central banks, including monetary and financial stability, payment systems and reserve management, to name just a few. In short, there is a need to organise central bank cooperation in a more focused, coordinated and dedicated manner in order to pursue our common interests. 2  BIS Review 61/2006  Today, with the World Bank experts and policy-makers, regulators and private-sector participants of the region gathering here, the conference will offer us a good opportunity to exchange views on what is needed to further promote regional cooperation and financial integration in Asia. We will also cover more specific subjects including the broadening and deepening of securities markets, the development of securitization and derivative markets, and the role of the contractual savings and asset management industries in the development of capital markets.
In spite of the brisk primary and secondary market activities in a few stock exchanges in the region, capital markets, in particular the bond market, remain rather underdeveloped. There is much more to be done, therefore, to further develop the financial markets by the regional jurisdictions. The second part of the conference title - 'The New Frontier' - also contains an important message. Globalisation and the revolution in information technology have fundamentally altered the dynamics of international finance. Such changing dynamics raise concerns among many of us about the manner in which a sizable portion of gross savings in Asia finds its ways into financial obligations of the developed markets before they are recycled back to Asia. As the capital inflows into the region tend to be more volatile, the recycling process may have implications on monetary and financial stability in the region. Another aspect of the dynamics of international finance is contagion. World interest rates have until recently stayed at record lows. In search of higher yields, hedge funds and other institutional investors have scoured the world for assets generating higher returns, driving up asset prices and driving down credit spreads. As the interest rate outlook has become uncertain, fund managers may be reassessing the risks of emerging market assets, as reflected in the recent correction in world equity and commodity prices. A sudden exit of capital could leave those economies with weaker financial systems even weaker, with spillover effects on other parts of the region.