Settlement risks  BIS Review 46/1999  2  with repo transactions, however, are significantly lower because in our system, collateral must only be transferred between accounts by the central securities depository. This is a simple and straightforward process which - if necessary - could even be implemented manually. Consequently, we encourage banks to pay special attention to their holdings of repo collateral when engaging in their liquidity planning. Furthermore, we will considerably expand our repo basket by including selected foreign currency securities. This step which is primarily motivated by our intention to transact also with counterparties abroad obviously produces a useful sideeffect on collateral availability over year-end. It is our clear commitment to provide liquidity sufficient to smooth market developments before and at the transition. Of course, all banks, especially those which do not engage in repo transactions, can avail themselves of significantly increased lombard limits just for the year-end, if they wish so. As regards the distribution and the available stock of banknotes, we have made the necessary provisions. After having put a new banknote series into circulation recently, our inventories are more abundant than they would have to be even in a worst-case scenario. Final remarks Let me conclude by making two final remarks. Firstly, the need for successful active and reactive communication can hardly be overestimated. The millennium has an almost magical fascination which may stimulate crisis fantasies and is perfectly capable of triggering herd effects.
Yet, in a significant part of Asia, notwithstanding its financial clout, a significant part of domestic savings is still put under mattresses. A convenient and effective channel that could be used to absorb these savings, in a manner that commands the confidence of those who save, does not exist. Where some form of financial system exists for facilitating the important process of financial intermediation, it is usually a system that suffers from a preponderance of banks. This lack of diversity in the financial intermediation channels is widespread in Asia; and frustratingly so, particularly for those with responsibility for promoting such diversification, for the sake of efficiency as well as financial stability. The market capitalisation and turnover of domestic debt and equities, in absolute terms as well as relative to GDP, is generally low when compared with corresponding numbers in the developed markets. This is so even in Hong Kong, the pre-eminent international financial centre in the region. The domestic debt market there, in terms of the amount of debt outstanding in the domestic currency, is only about 45% of GDP, although this is partly the result of a long history of fiscal discipline. The emerging markets of Asia are aware of the important need for financial system development. This brings me to the third characteristic, which concerns the development strategies being adopted. Although these vary between different economies, having regard to the domestic circumstances, one underlying strategy common to all is financial openness.