Asian monetary co-operation Indeed, this survey, focusing on six characteristics of Asian finance, represents, to me at least, a rather unhappy state of affairs. Asian finance is in a fragmented state, understandably though, given the many currency jurisdictions present, each adhering to the Asian tradition of minding one’s own business. To be sure, the desire to pursue and maintain financial openness, in view of the potential and demonstrated benefits to growth and development, is still strong. But many have become weary, worried, cautious or shocked to varying degrees by the experience of financial globalisation that came  4  BIS Review 66/2004  with financial openness and intensified by the revolution in information technology. From a regional perspective, it does seem that Asian finance is organised in such a way that, instead of harnessing its financial strength to its advantage, it finds itself in a position of vulnerability to financial instability. It is with this sentiment that I turn now to the subject of Asian monetary co-operation. Some would argue that the fragmented state of Asian finance, to the extent that it is an issue, is merely a reflection of the diversity of Asia, in terms of history, geography, culture, stages of economic development, size distribution, political structure, degree of economic and financial openness, etc. Indeed, Asia is a very heterogeneous group of economies. In the richest economy, per capita GDP, if this is an appropriate measure of richness, is about 180 times that of the poorest.
I very much hope that I can convince you today why this is so. As I shall demonstrate later, the financial significance of Asia is indisputable. Yet, in many parts of Asia, financial intermediation, which is so important to promoting economic growth and development, remains elementary. There is I think an urgent need for Asia to harness its substantial financial resources for promoting growth and development but also for minimising Asia’s vulnerability to financial instability. With financial globalisation, the ability of Asia to get this right has significant implications for global finance. I also hope that I can, at the same time, raise your interest in some of the specific monetary and financial issues that we are tackling, in the region as a whole and in individual economies, with a special emphasis on China, including Hong Kong, where I come from. Asian finance Let me begin with a description of Asian finance, as I see it. There are six characteristics I would like to draw your attention to. The first is the financial significance of Asia. As I mentioned earlier, this is phenomenal. It is easy to appreciate this by pointing to some impressive numbers, such as those relating to the amount of foreign reserves held by Asian economies and the amount of portfolio and foreign direct investments going into, or coming out of, Asia. Indeed, there are seven economies holding foreign reserves in excess of $ billion and all seven of them are in Asia1.