The issues now range from the choice between the use of rule versus discretion on bank capital, to the use of leverage ratio, and to the implementation issue that includes how to exercise the measures effectively in the context of a financial system that is non-complex, as is the case of the SEACEN economies. On this, I have a view that vigorous stress-testing by supervisors and banks can help keep the effects of procyclicality manageable. I hope this conference will further discuss this issue. Finally, the complexity and cross-border linkages of financial systems will continue to increase, not decrease, following this crisis. On the other hand, the right and effective global regulatory and supervisory structures to handle cross-border implications are still evolving, while information flows and cooperation among regulators and supervisors, at this time, continue to be limited. It is clear that without significant improvements in both information flows and cooperation among supervisors, it will be difficult to prevent or contain future financial crisis spillovers effectively. Ladies and Gentlemen, this eleventh SEACEN conference provides us with an excellent opportunity to discuss these current and important issues. Our challenges are similar, and through our coordinated views and collaborated efforts, the SEACEN economies collectively will be in a stronger position to address these challenges. I wish all of you a successful conference with a fruitful exchange of ideas and a wonderful collaboration.
In the current crisis, the securitization boom and the easing of monetary policy in the US helped fund the loan growth, while in the case of the Asian financial crisis, it was the large capital inflows in the form of direct borrowing that funded the credit boom. In both cases, however, poor underwriting standard by banks was an important common contributing factor. Looking back, the Asian financial crisis has been an important turning point for policymakers in the region, as the lessons learned from the crisis had led to many important policy reform initiatives, all of which aimed at strengthening the robustness and the risk management discipline of the domestic financial systems, and this brings me to my second point. BIS Review 96/2009  1  In the case of Thailand, after having restored financial stability in the early 2000s, financial reform became a top priority, with emphasis on instilling prudent regulations and strong risk management. We adopted a macro-prudential approach in the early 2000s, in recognition of the systemic linkages between the financial system and the increasingly opened macroeconomic conditions; utilizing our natural institutional advantage as we continue to oversee both monetary policy and financial institutions supervision. Hence, from 2003 to 2006, a series of macro-prudential measures were introduced, aiming at restraining then the rapid growth of credit, especially credit card loans and mortgage loans.