Available at http://www.bankofengland.co.uk/publications/speeches/2010/speech438.pdf. 2  BIS Review 135/2010  experience and those acted as a backdrop to our own operations. In the remainder of this speech, I want to discuss how we structured the UK’s asset purchases. One aspect of our policy design for QE was to act decisively to prevent the risk of deflation. In Japan, although their programme of outright purchases of government bonds (JGBs) amounted to some 13% of nominal GDP, those purchases were conducted over a period of 5 years (2001–2006). And they only began after deflation had already been observed. It is possible that this dampened the impact 8 and other policies were being pursued at the same time. In the UK we conducted the purchases in similarly large size (14% of GDP) but relatively quickly (over 10 months), to ward off the threat of deflation rather than as a response to it. A second aspect of the design was to target our purchases at assets held by the non-bank sector. The proposition is that, by buying gilts from pension and insurance funds (for example), those asset managers would have more cash in their portfolios than they desired, and would be incentivised to use that cash to invest in other, more risky instruments such as corporate bonds and equities.
Such an institute will also play an important role in  2/3  supporting the development of financial markets in Asia, as well as producing the next generation of Asian Financiers. The second area that should also be considered is the harmonization and streamlining of the existing rules and regulations. This is especially important for cross--border capital movements so that the region’s financial resources can flow more smoothly between economies in the region. Streamlining rules and regulations will help reduce unnecessary barriers, and through lower transaction costs, will allow a more efficient allocation of resources. For example, measures to protect domestic markets from outside competition may need to be relaxed. Along the same line, there is room to harmonize taxes on capital market transactions so that tax implications are neutral and do not act as a constraint to efficient resource allocation. Ladies and Gentlemen, My last thought for today is on ways we should proceed to expedite the pace of regional financial cooperation. At this juncture, there is no disagreement that we all would like to see more and faster progress on regional financial cooperation. And, to ensure its progress, we have seen policy makers in Asia ready and prepared to take bold and important policy actions. My view is also the same. I also want to see a faster pace of development rather than a slow one. But one also needs to underscore that, to achieve long term sustainability and continuity, the process of development needs to be market driven rather than policy driven.