  Euro area countries have taken rapid and significant steps to bring their public finances back into balance and going forward to restore the competitiveness of their economies. This is clearly the case for countries whose debt markets have been the most affected over the past months.   Yet, in May, financial markets started to seize up again, admittedly in a slightly different way than that seen in 2008, but with the same potentially disastrous consequences, that is to say a drying up of financing for the economy. In 2008, the financial system was badly impacted by the subprime crisis and the failure of Lehman Brothers that brought transactions to a standstill as market participants realised that any bank, no matter how big, can fail especially since the exact amount of exposure to subprime risk of all institutions were not fully known. In the May 2010 episode, the same dynamics were at work: the different investors started to believe that euro area countries could default on their debt, and therefore stopped lending to these countries or their banks, or to any banks with possible exposure to these countries and, finally, as a precaution, ceased all lending activity. This situation called for rapid and decisive action by the ECB because:   We cannot implement monetary policy in dislocated markets that do not effectively allocate the liquidity that we inject or that radically modify the effects of our monetary policy by offering interest rates that are inconsistent with our key rates.
Zeti Akhtar Aziz: Regional integration and global integration – is there a conflict? Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Official Monetary and Financial Institutions Forum Kuala Lumpur Debate, Kuala Lumpur, 20 March 2015. *  *  *  It is my great pleasure to welcome you to the inaugural Kuala Lumpur Debates, which is being held on the side of the 19th ASEAN Finance Ministers and Central Bank Governors Meetings. It is envisaged for this to be the first in a series of KL Debates intended to serve as a strategic forum for policy makers, industry players as well as members of the public to constructively discuss the key issues confronting the economies of our region and thus to facilitate greater understanding as we work towards building stronger foundations for sustainable growth. The motion that is put forward for debate today is “Regional integration and global integration: is there a conflict”. The debate format is chosen to allow both points of view to be heard, thereby ensuring a balanced discussion and evaluation of the issues. This topic is highly relevant to ASEAN as there have been various views on ASEAN integration and what it means for the rest of the world.