Zeti Akhtar Aziz: Outlook and prospects for Asia Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Asia Pacific Bankers Club Conference, Kuala Lumpur, 15 September 2003. *  *  *  Y.Bhg. Datuk Amirsham A. Aziz President of Asia Pacific Bankers Club 2002/2003 Members of the Asia Pacific Bankers Club Ladies and Gentlemen Introduction Powerful forces of change reinforced by global political, economic and financial developments have had pronounced implications on the economic and financial environment we operate in. It has not only dramatically changed our economic and financial landscape but has brought with it new uncertainties, risks and challenges. Despite these developments, the Asian region has demonstrated resilience and continues to emerge as the fastest growing region in the world. The issue before us is - to what extent can Asia continue to prosper in this increasingly more difficult and changed global environment? To what extent can Asia’s previous successes be sustained in these more challenging circumstances? It is my pleasure to be here today on this occasion of the Asian Pacific Bankers Club Conference on “Financial Stability and Challenges”. Let me take this opportunity to also welcome the delegates to Kuala Lumpur. Indeed, high priority has been accorded by the economies in this region towards achieving financial stability. Varying degrees of financial restructuring and reform have been undertaken to strengthen domestic financial systems.
It is clear, in retrospect, that our attempts in the spring of 2013 to provide guidance about the potential timing and pace of tapering confused market participants. Market participants seemed to conflate the prospective tapering of asset purchases with monetary policy tightening, and pulled forward their expectations about the likely timing of liftoff and raised their expected paths for policy rates. Lately, we seem to have done better: the tapering down of the Fed’s asset purchase program went smoothly and market participants now seem to share the assessment embodied in the FOMC’s March Summary of Economic Projections that lift-off is likely to begin sometime later this year. As you know, we’ve taken a number of steps in recent years to increase transparency and improve our communications. This includes regular press conferences by the Fed chair following FOMC meetings; the publishing of growth, inflation and short-term rate forecasts of FOMC participants; and a concerted attempt to lay out the guideposts that the FOMC will look at to assess progress toward our mandate. We also have explained in considerable detail what tools we will use and how we will likely use them to ensure to ensure a smooth lift-off. A second area we have focused on is doing a better job safeguarding financial stability. Simply put, we failed to act both early enough and decisively enough to stem the credit excesses that spawned the financial crisis and the Great Recession.