In recent years, financial security becomes one of necessary issues in the multilateral or regional economic cooperation, under the background of economic globalization and the increasing instability of the international financial markets. From the establishment, ASEM began to play an important role to reinforce the comprehensive economic cooperation through experiences intercourses and policy dialogues in the region of financial security, and to resist the risks and difficulties caused by the fluctuation in financial markets among ASEM member countries.

The explosion and outspread of the U.S. subprime mortgage crisis from 2007 have caused the global financial markets falling into the violent turmoil which is uncommon during the recent 30 years. The global economy has been facing the downside risks, affected by the slowdown of the U.S. economy, tightened credit conditions in global financial markets, and mounting inflationary pressures mainly driven by high energy and food prices. Meanwhile, the flowage of enormous financial capitals among different sorts of international financial markets becomes more and more furious, which also poses negative impacts on the stable development of the world economy and the long-term financial security of both Asian and European countries.

Under this background, the comprehensive cooperation in the region of financial security by the ASEM member countries was necessary to maintain sustainable global economic growth. As the recognition to the importance of Asia-Europe cooperation in financial security achieved by the eighth ASEM Finance Ministers’ Meeting (ASEM FNMM), which was held in Jeju Island, Korea on 14-17 June, 2008, “The ASEM cooperation in financial security would bring financial stabilization, lessen the uncertainty and improve the economic growth of both regions.”

The ASEM member countries’ cooperation in financial security refers many special issues and it still deepens gradually. At the starting of ASEM, The cooperation in this region only included reiterating the resolutions and principles related to financial security which were reached by Asia-Europe summit meetings and ASEM FNMM, and reinforcing the information intercourse and communication by financial security’ dialogue among ASEM member countries.

In recent years, the ASEM cooperation in financial security paid more attention to implementation of the practical co-operational projects and harmonization of ASEM member countries’ financial policies, as well as the in-depth discussions on the paths and experiences to stabilize the Asian-Europe financial markets.

Currently, the ASEM cooperation in financial security mainly includes the establishment and implement of the ASEM Trust Fund and the follow-up activities, the spread of European Financial Expert Network, the international cooperation on combating terroristic financing and money laundering, and the cooperation in the region of Kobe Research Items, the Public Debts Forum and the implementation of the Bali Initiative, and so on. The ASEM cooperation in financial security improved the regional financial and fiscal cooperation between both regions and guaranteed the stability and sustainable development of the financial markets for the two continents.

Under the current downside risks have emerged in three pillars of world economy -- U.S.A., Japan and European Union, the ASEM cooperation in financial security will afflux new energy to safeguard each other’s economic securities. The ASEM cooperation in financial security no only improves the gradual establishment and perfection of the regional financial market, but also contributes to the reasonable relocation of inner financial resources between two continents, as well as contributes to realize the regional financial market’s multilateralization and then to increase its stability, which also reduces the input costs of financial capitals. In this context, to reinforce the mutual support and cooperation in the region of financial security conform to the common and long term benefits of the Asia and European countries. To realize this object, the ASEM member countries need adopt the following measures:

To strengthen the coordination on macro-economic polices among the ASEM member countries, to hold the regular ASEM Finance Ministers’ Meetings and the Governor Meetings of Centre Banks to exchange economic and financial development information among Asian and European countries, to consolidate the domestic financial system of the members and to harmonize those financial policies. The ASEM member countries need adopt responsible macro-economic policies to curb the big fluctuations in commodity prices, especially of oil and food.

On the basis of the ASEM Contingency Dialogue Mechanism for Emergent Economic and Financial Events, to establish the ASEM financial security presentiment and precautionary cooperation framework, including formulating the criterion to regional financial conducts, setting-up the contingency capital assistance mechanism, such as the subscription of currency exchange negotiation, so as to maintain the economic and financial security for both continents.

To actively explore and advance fiscal and financial cooperation between the two continents, to develop the Asian regional bond market and support the role of the euro in maintaining international financial stability, so as to enhance the international standing of Asian and European currencies and furthermore to maintain the stability of the major reserve currencies. To establish new cooperative financing mechanism on the basis of ASEM Trust Fund, so as to provide capital safeguard for the future fiscal and financial dialogue and relating capability building;

To strengthen the experience sharing and collaboration on macro-finance surveillance and micro-finance risk management among Asian and European countries, to provide technical assistance and to enforce financial HRD training programs which focus on the Asian and European developing members, to render greater support to the poorest countries and to encourage all members to implement the Asia-Europe Fiscal and Financial Capability Building programs jointly initiated by China, Austria and European Union.

To encourage more comprehensive Asia-Europe financial cooperation to implement The New Basel Capital Accord, to consolidate the risk surveillance principles which emphasize the capital adequacy ratio and credit risk management, and to harmonize the methods of banking risk managements among the ASEM member countries by reinforcing the three pillars of minimum capital requirements, external supervisory review process and market discipline.

To carry out the in-depth discussions on development paths and strategies, and share the best practices related to realizing the stability of financial market and implementing macro-economic structural reforms under open conditions. To promote the comprehensive participation in the above discussion by fiscal and financial representatives, especially including those Small and Medium Sized Enterprises (SMEs) from all of the ASEM member countries.