They need to cushion the social impact of globalisation, to help industries that are no longer viable make the change, to equip the population with the necessary skills for the new economy, and to provide a social safety net for those at the bottom. There is no real alternative to accepting globalisation in order to improve the lives of our people. BIS Review 111/2000  4  ASEAN economic cooperation It is also important for ASEAN countries to work together, both to strengthen cooperation among themselves, and to address international issues of common concern to all of us. ASEAN economic cooperation was progressively gaining momentum before the crisis. Major initiatives had been launched, especially the ASEAN Free Trade Area (AFTA) and the ASEAN Investment Area (AIA). These promised to increase significantly the flow of trade and investments among ASEAN countries. However the crisis has caused some countries to hold back, in order to give struggling domestic industries more breathing space. These pressures are real, but in their anxiety to protect individual industries, countries should not lose sight of the wider benefits of ASEAN cooperation to their economies as a whole. It is therefore important for ASEAN members to reaffirm their commitment to regional economic cooperation and integration, and implement AFTA and the ASEAN Investment Area in letter and spirit. The ASEAN members which are doing relatively better, such as Thailand, Malaysia, Singapore and Brunei, should take the lead, and work together to put ASEAN cooperation on track again.
On the one hand we can choose a path towards fully-integrated international regulatory and supervisory structures, in order to achieve a better match with the global format of the financial system. On the other hand, we can choose a path towards shrinking the financial system back inside national borders, within the perimeters of current regulatory and supervisory arrangements. Obviously, reality will not be as black and white as to make a simple choice between these two paths possible. Future regulatory reform will probably take some kind of middle road. But if someone asked me for directions my answer would be clear. The benefits of financial globalisation are too great for us to afford to close national borders and to roll back financial integration. A new European supervisory structure – the de Larosière proposals As you all know, the European Union chose its path already some time ago. Based on the belief that integrated markets contribute to economic growth (and also to other important policy objectives) the European Union has established a legal and institutional framework for the supervision and regulation of financial markets. However, even though we have come a long way towards establishing a single European market, the regulatory and supervisory structures are still very much fragmented along national lines – a fact that we have been painfully re-minded of during the current crisis. The problems experienced with the Icelandic banks and the Benelux-based conglomerate Fortis are just a couple of examples.