3  Laeven, L and F Valencia (2013) “Systemic Banking Crises Database”, IMF Economic Review 61(2), 225–270, IMF. Output losses are computed as the cumulative sum of the differences between actual and trend real GDP over the crisis period in relation to pre-crisis GDP. 4  Basel Committee on Banking Supervision (BCBS) (2010) An assessment of the long-term economic impact of the new regulatory framework, August. The loss of output represents referred to represents the median cumulative discounted output loss reported by a number of academic studies assessed in the study, measured over the period from the peak to the end of the crisis. The output loss does not include permanent losses in GDP, i.e. where the GDP trend does not recover to the pre-crisis level. 5  The bank stating this was Merrill Lynch. Source: FCIC. BIS central bankers’ speeches  3  capital markets.” – This bank incurred USD 13 billion losses in Q1 2008 and USD19 billion in writedowns on real estate and related structured credit positions.6 I can assure you that there are many more similar examples to quote – the message being that the proposed reforms were overly restrictive, would damage the market and reduce activity. This illustrates that we need perspective when assessing the feasibility of reforms.
But harmonization takes time as the devil is in the details. And harmonization may go beyond regulations on the trade or issuance of bonds. As cross border initiatives, they inevitably involve regulations over international capital flows which we need to also respect both host country and home country authorities. For instance, the home country may allow their savers to invest abroad, but the recipient countries still maintain controls on inflows. Other regulators may permit non residents to make use of tools such as repo, as liquidity enhancing mechanism, but others may look at this measure as way to engage currency speculation. These are all delicate balancing acts which we would need to tackle as we strive to integrate our financial markets further. And while we pursue development and liberalization objectives we also need to strengthen our regional safety net. Today our regional cooperation has multilayer safety net consisting of Cross Border Collateral Arrangement (CBCA) for our banks to avail themselves of liquidity from the host central bank using collaterals at their home or head office, bilateral foreign exchange swap line, and the Chiang Mai Initiative Multilateralisation (CMIM) serves as second line of defense and should continue to be enhanced to counter possible market turbulence. As you have heard from the Minister of Strategy and Finance of Korea, Mr. Bahk Jaewan, the ASEAN+3 Finance Ministers and Central Bank Governors have made progress on important features of the CMIM. We have announced the doubling of the total size of the CMIM from $ billion to $ billion.