The global financial and economic crisis marks an important turning point for finance and
the Asian growth model. Regional consensus is now supporting economic rebalancing
away from the dominant focus on exports to developed markets and towards more a
more balanced economic structure supported by domestic and regional financial
development. In relation to finance, the crisis highlights the necessity of addressing a
range of issues across the region. First, Asian approaches to financial liberalization,
prudential regulation, and financial innovation are likely to be closely considered around
the world. At the same time, while the region has not been at the center of the global
crisis—in contrast to the Asian financial crisis of 1997/98—it nonetheless provides an
important opportunity to strengthen domestic and regional financial regulation. Second,
beyond the post-crisis issues, and the prevention of systemic risk in particular, finance
must continue to play a central role in supporting economic development and poverty
reduction across the region. While the global crisis has highlighted once again the risks
of finance, a central objective across Asia must be financial sector development to
support economic growth and development. Third, in addition to domestic reform, the
crisis provides an opportunity to enhance the international financial architecture, not only
to improve its efficacy, but also to enhance the role of empowered Asian economies in
global fora and institutions. At the same time, weaknesses in the international financial
architecture suggest the need for Asian regional alternatives to address liquidity,
liberalization, regulation, and exchange rate volatility.published_or_final_versio