In respect to the conditions prevailing in Malaysia, Malaysia's strong economic fundamentals, with low rate of inflation, strong external balance, low level of foreign debt, strong reserves levels and strengthened banking sector have provided strong support for the pegged exchange rate regime. Malaysia also has sufficient flexibility to undertake adjustments on all sectors of the economy to remain competitive. The diversified economic structure, the enhanced mobility of capital and labour has also provided Malaysia with increased resilience to weather external shocks. Malaysia also had the flexibility of policy to respond to the circumstances. In all cases, when an exchange rate regime has failed, it was not due to the regime itself, but due to the weaknesses in the economy and the financial system. Having undergone significant transformation and emerging with a much strengthened set of fundamentals, the Malaysian and regional economies are better able to absorb the volatility in the exchange rates. Countries are also more cognizant of the costs of currency depreciation, particularly on confidence. As an example, comparing the response of regional currencies during the two episodes of yen depreciation, one in the early part of 2001 and the other towards the end of 2001 and early 2002, it is clear that the response of regional exchange rates was significantly more muted during the most recent episode.
This workshop will help us learn from other practitioners' experiences who have already tackled some of the issues we are due to solve or are in the process of doing so. I wish you all a very productive rest of the day discussing about these issues. Thank you. 3/3  BIS - Central bankers' speeches