In trying to draw attention to this area, I have often said that while billions of dollars are spent in building highways and airports as part of the physical infrastructure, in order to move people around efficiently and safely, there is by comparison very little money spent in building the financial highways and airports to move money around efficiently and safely. As a result, the money does not move, at least not as much as one would like to see. Consequently, effective financial intermediation domestically and across economies in the region is inhibited, notwithstanding the rather attractive returns offered by the prosperity of this region. Financial markets remain fragmented along with geographical fragmentation of the region, and there is a lack of liquidity because the regional critical mass has not yet been formed. 55. Another common complaint about Asian financial markets is the inefficiency of settlement and clearing processes for money and financial products. As a result, the tendency is for many of the Asian economies to make use of established clearing and settlement systems in Europe and America. For example, Asian trading of Euro-yen paper has to be cleared and settled in European time. There is of course no logical answer to the question why trading of Asian paper by Asians cannot be settled and cleared in Asian time. I am often reminded that the Eurodollar and Eurobond market took off when Euroclear was established in the late 1960s.
So, referring again to one of the purposes of the IMF, as defined in its Articles of Agreement, there is a clear need “to promote international monetary co-operation” through “consultation and collaboration” on these “international monetary problems” that we now face in the Asian region. The Way Forward 40. I would like now to spell out how I think monetary co-operation in this region should proceed. In order to have effective monetary co-operation, we must have clearly defined and realistic goals. Over-ambitious goals may not be credible, and may even be counterproductive. In any case, they may not be politically acceptable to the individual economies. Monetary co-operation, and indeed any type of co-operation, is meaningless when you do not have common goals. 41. Notwithstanding increasing economic integration, one has to accept reality, and this is that the economies in Asia are a very diverse group. There are dramatic differences with regard to political institutions, economic systems, basic infrastructure and any aspect you care to think of. In terms of economic structure, for example, they range from some of the largest agricultural economies in the world to the most urban economies. In terms of economic philosophy, they range from some of the freest economies in the world to economies where there is considerable central planning. In terms of the stage of economic development, they range from economies with the highest per capita incomes to those still with a large part of their population living in poverty.