Moreover, several challenges such as the advent of ASEAN Economic Community (AEC) in 2015, the implementation of the Basel III accord and the rocky recovery of the western hemisphere, remained ahead of us. In this regard, I view that priority should continue to be on strengthening the role of domestic and regional institutional investors. This group of market participants are important players on both the issuer and investor side. Collective investment or asset management companies can be an important vehicle to channel cross border savings for cross border investment. We know all too well that very few non financial single name issuer can succeed in a foreign market if they are not well known household names. But institutional investors such as insurance, pension funds and asset management firms are likely to be able to better intermediate cross border savings and investment. These institutional investors would be able to provide a two way flow and with a better knowledge of regional conditions and a natural home bias, would also be a stabilizing factor during severe market stress. A stronger and broader regional institutional investor will also provide opportunities for diversification as well as alternative saving vehicle that would serve the changing demographic trends. Throughout Asia, we are seeing increasing demand for more sophisticated wealth management services. As regulators we also need to continue to collectively enhance our infrastructure and further harmonize regulatory regimes to support greater cross border activities. Standardized market conventions help promote cross border issuance in our respective markets.
Today, many of the ASEAN-5 countries have fairly deep and liquid local bond markets. Central banks, whose operation is contingent on a deep and liquid bond and foreign exchange markets, have been part of the development process for the government bond market. Over the years, our financial markets have become more efficient, more sophisticated and more balanced. ASEAN-5 have moved from a predominantly bank-based or credit market to a growing capital market, both equity and bond. We have also strived to better manage the impact from volatile capital flows as we seek to balance between foreign inflows and capital outflow. Here bond markets have been instrumental to help absorb the impact from the volatilities and sudden reversal of these flows. These developments have facilitated central banks in their conduct of monetary policy, manage market expectations, and guide the path of monetary policy. Today, the ABMI is taking this development further from a domestic orientation to a regional level. This is timely in view of the increasing need for Asians to find new sources for growth and new markets for their exports, and in recognition of the need for “Asian savings to finance Asian investment”. Initiatives such as the Credit Guarantee and Investment Facility (CGIF) is a case in point that aims to foster cross border fund mobilization using the tools of a regional credit guarantee vehicle.