Post-Crisis Regulatory Reform in Financial Markets and Its Implications for Asia

Having implemented various measures to secure financial system stability following the Asian currency crisis and nonperforming loan problems, Asian financial markets were relatively less affected by the global financial crisis. The effects of the crisis are, however, still lingering in the U.S. and European financial markets, which have been leading global finance up until the crisis; they are continuing their search for an exit. Consequently, many financial institutions find Asian markets more attractive compared to the time before the crisis. It should be noted, however, that while each country should be ready to respond to a possible future crisis individually, Asian financial markets as a whole should also be prepared.
In this session, the current situation of post-crisis regulatory reform will be reviewed both from global and Asian perspectives, and based on this analysis, challenges for Asian financial markets will be identified and measures to prevent future crises and the implications of such measures for Asia will be discussed.

Towards a Better Framework for Supply of Funds in Asian Financial Markets

In Asian financial markets, evaluations of risks and returns by banks are not necessarily easy for lending to small and medium-sized enterprises (SMEs), and therefore bank lending secured with real estate currently plays a major role in indirect finance. In this regard, there is concern that markets are not fully meeting the various funding needs of SMEs. Asia also faces a challenge in that markets for direct finance have not yet matured, as is evident from the fact that the supply of risk capital, through venture capital for example, is insufficient and that stable corporate bond markets have not yet developed. Cross-border capital flows also have a great impact on the supply of funds in Asian financial markets.
To address these issues, this session will analyze the situation in the financing of SMEs, including microfinance, followed by a discussion on measures for further development of Asian financial markets, including an appropriate regulatory framework.

Asian Market Integration: Competition and/or Cooperation

In order to maintain and further enhance the attractiveness of the Asian financial markets, the integration of major Asian financial markets should no longer be a dream, but the time has come to consider concrete steps toward realizing it. To this end, the development of market infrastructure and regulations in the Asian financial markets needs to be analyzed and appropriate measures need to be designed to keep pace with the evolving environment.
This session will first examine specific challenges regarding how competition and cooperation should be advanced from the perspectives of Asian market integration. Then discussion will follow on how Asian stock exchanges could cooperate and compete to stimulate Asian financial markets, and also on the possibility of new securities businesses that could arise therefrom.

Innovation in Financial Market Infrastructure in Asia: Advanced Settlement Systems

Settlement systems, including central counterparties (CCPs), play the vital role of circulating funds safely and smoothly throughout the economy, and the safety, efficiency and convenience of settlement systems have been improved through the innovation of such systems to date. In addition to being an essential infrastructure for financial markets, settlement systems themselves have potential as a class of financial business, and also have an aspect of promoting development of new services and stimulating competition among existing services. At the same time, it is important to examine how their operation can be conducted in a way that suits the situations of individual systems.
In this session, we will take up examples of various innovations in Asia, such as Japan’s electronically recorded monetary claims system aimed at enabling smooth financing by firms, the BOJ-NET (an interbank settlement system), and CCPs. Based on such observations, we will explore the current status of settlement systems and the possibility of their further development in Asian countries.