The region remains heavily reliant on bank lending, and capital markets are not deep enough. •  According to McKinsey, bank loans were more than a third of Asian banking and capital markets, compared to just 10% in the US. •  Debt capital markets are particularly under-represented, contributing only 20–30% of financing in Asia, compared to 65% in the US and 55% in Europe. A “new normal” in global finance? How will the global financial landscape change in response to these three driving forces? It will be hard to say but let me hazard some guesses. First, if the reforms are well implemented, we should see a material reduction of risk in the financial sector and improved financial stability. I do not think we will see an end to financial crises as such, but financial systems should become more resilient. This, in and of itself, will enhance economic welfare substantially. Second, financial institutions will be forced to rationalise their business models and streamline their operations to better optimise capital, reduce compliance costs, and enhance efficiency. Third, global financial institutions will expand their Asian footprint. They will establish more Asia-focused teams and functions. Many of these firms will make a second home in Asia. But Asia is a diverse and non-homogenous market. Global financial institutions will hub in more than one location. The structure of global banks is likely to change significantly. Banks’ profits and return on equity will come under pressure. The risk-return profiles of virtually all banking products will be re-ordered.
There is a saying: “The face you have at age 20 is the face Nature gives you; but the face you have after 50 is the face you earned” MAS’ face today, on our 50th anniversary, is perhaps marked with the scars of crises fought and overcome and hopefully also a few lines of wisdom gathered over the years. It is also – we like to think – a radiant face, as we look ahead with hope and confidence, to push the boundaries of innovation, to make finance more inclusive, more sustainable, and more purposeful, while ensuring it remains safe. Thank you and have a good evening. 3/3  BIS central bankers' speeches