To bridge this shortcoming, the region’s financial markets need to be substantially expanded and developed so that the region’s markets can effectively allocate surplus savings within the Asian region. The current focus on regional bond market development is therefore a step in the right direction. But my point today is that while developing the bond market is important, two additional areas of market developments in tandem with the work on the bond market should also be looked at to ensure a balanced development of financial infrastructure in Asia. The first is human resource: that is the need to build a steady supply of high quality financial personnel to serve the Asian financial markets. In the short term, this issue can be partly addressed by promoting a greater role of Asian financial institutions in cross-border transactions or businesses within the Asian market. The expanded role of Asian financial institutions will enhance the experience of Asian financial firms in cross-border transactions and help transfer financial skills and technology among market participants in the region. For the long term, we should be thinking of establishing a regional finance institute that aims specifically to train and develop financial personnel for the Asian market. To me, this type of initiative looks practical and is economically feasible because Asia’s large domestic market will always call for substantial demand for trained financial personnel.
This progress has been driven by a combination of factors, but the most important has been the Asian financial crisis itself, which prompted policy makers in the region to recognize the potential benefits of financial cooperation as a mechanism that can allow the region to prevent or to better manage the risks of financial crisis. Since the 1997-98 crisis, regional financial cooperation has been strengthened in three main ways: The first is the strengthening of liquidity arrangements, the second is the introduction of regular policy dialogue and surveillance, and the third is the coordination of efforts to develop the region’s bond market. So far, progress which has been made includes an expanding network of Bilateral Swap Agreements between ASEAN and Plus Three countries under the Chiang Mai Initiatives to provide short-term liquidity. There is also the Formal and Informal ASEAN+3 Finance and Central Banks Meetings to exchange information and discuss policy issues, as well as the discussion under the APEC platform. Also, new developments from the Asian Bond Market Initiative and the APEC Forum have also been launched to develop the region’s bond market. My point is that these achievements are important and their realization would not have been possible without the awareness and the determination of the authorities concerned to make them happen. But notwithstanding the progress made, more can definitely be done to bring regional financial cooperation to a level that is on par with the region’s economic and financial potentials.