GREATER COLLABORATION NEEDED FOR FINANCIAL STABILITY

KUALA LUMPUR, Feb 7 (Bernama) -- Globalisation and financial integration now
affect financial stability, with regional and global implications needing to be
considered, Malaysia's Central Bank governor Dr Zeti Akhtar Aziz said Friday.

"Thus, greater international collaboration is needed," she said in her
welcoming remarks for the 44th South East Asia Central Banks (SEACEN) meeting at
the central bank here Friday.

Moreover, the re-alignment of the international financial architecture has
become even more urgent, otherwise gains achieved at the national level would
continue to be undermined, Zeti said.

"With each missed opportunity to embark on necessary reforms to the
international financial architecture, the financial, economic and social costs
have and would continue to become increasingly higher," she said.

Theme of the meeting is "Preserving Monetary and Financial Stability in the
New Global Financial Environment".

The SEACEN grouping has a long history of serving as a platform for
high-level policy discussions. The SEACEN centre was established in 1972 but the
SEACEN governors have been meeting annually since 1967.

Zeti said that since the Asian financial crisis more than 10 years ago, the
region has benefited from the reforms and restructuring of respective financial
systems and economies.

"While our strengthened position has not insulated us from destabilising
external shocks, it has however strengthened our capacity to cope with such
developments," she said.

According to Zeti, the region has also benefited from the greater pace of
regional financial and economic integration.

"Our increased propensity to trade and invest with one another contributes
towards building the foundations for stronger regional stability and
resilience," she said.

This, Zeti said, has also been reinforced by greater regional collaboration
and cooperation.

"Despite the diverse financial and economic structures, we have all shared
the same conviction in that financial progress has to be accompanied with the
appropriate degree of regulation and supervision to preserve financial stability
but without stifling the incentives for financial innovation and the adoption of
prudent risk-taking," she said.

"Preserving monetary and financial stability in the current global
environment continues to resonate as the international dimensions of financial
instabilities impinge on our national frontiers and on the policy options
available to us."

Zeti said the current experience demonstrated the fragilities in the
financial systems, even among the developed economies.

"Critical issues are emerging particularly on financial intermediation,
financial innovation, and the corresponding regulatory regime and surveillance
mechanisms that need to be in place to provide the necessary oversight over such
activities," she said.

"These experiences have underscored the critical importance of good
governance, sound risk management, rigorous supervision and a strengthened
crisis management framework that are sufficiently robust to withstand extreme
market conditions."
-- BERNAMA