Asean central banks agree that the region's external challenge right now is the expected volatility in global fund flows caused by periodic differences in the direction of major economies' policies.
Meanwhile, the Bank of Thailand governor said yesterday on the second day of the "Bloomberg ASEAN Business Summit" that in his own country, the big challenge next year would be undertaking the reforms driven by the military regime while maintaining political stability.
Zeti Akhtar Aziz, governor of Bank Negara Malaysia, said: "There are many risks on the horizon, and these risks change over time along with their intensity. Right now the risks are volatile capital flows and the ongoing energy crises. When will they stabilise? And then there is [are] the commodity crises, since many of us are commodity producers.
"However, because of the conditions that are prevailing and because of policy flexibility that ASEAN central banks have, we have that degree of comfort and confidence that we have the ability to manage it. Therefore I sleep very soundly, and we always try to stay ahead of the curve so that we are in a state of preparedness," she said.
"I also sleep quiet quite well these days," said BOT Governor Prasarn Trairatvorakul.
He commented that the sources of risk that will have a major impact on the ASEAN region were outside the region in the advanced economies, "whether it would be their slowdown, their policies, and possible spillover" that central banks have to monitor closely.
"Thailand in particular still has some domestic challenges, and I hope that our political result [situation] can continue peacefully. That is very important along with the proposed reformations reforms, particularly on the supply side, [which] are very big challenges," he said.
Prasarn said the role of monetary policy was to create conditions conducive for economic expansion. "A single tool cannot solve every problem," and since fiscal policy is now functioning, monetary policy has, for now, "played its role".
He said the current financial conditions were accommodative enough to facilitate growth, while confidence in continued stability was acceptable, so "we should put more weight on other instruments".
He noted that the sheer range of reforms the military-led government was trying to implement was a challenge, targeting state-owned enterprises, state banks, infrastructure and taxes, among other things.
"Those are things that are real along with the reforms of the supply side, education, human capital and [entrepreneurship]," he said.
As for ASEAN's interest-rate normalisation, Prasarn said it was quite difficult to read the current direction, since the monetary policies of the major economies were moving in different directions. Therefore it is better for ASEAN to be prepared, and there is no need to rush for normalisation.
Zeti said most of ASEAN's markets were in "very sound and solid positions, and most of us are on a steady growth path, some higher, some lower". These are all important preconditions that will allow ASEAN to withstand the kind of volatility that normalisation will create.
"I do believe that Asia, in particular Southeast Asia, is in a state of readiness to intermediate [mediate] this volatility, but if it persists over a period of time this will affect sentiment, confidence, and that is not positive. Therefore I am more in favour of what Governor Prasarn said, that we have to get it right," she said.
"When these extreme conditions [volatile capital flows from major differences in the policies of major economies] no longer prevail, we will look forward and welcome the normalisation process," she added.
On Tuesday at the Bloomberg Business Summit's session on risks and opportunities facing the financial-services sector, bankers said ASEAN integration would provide opportunities for the financial and capital markets, while the consolidation among banks could be expected.
Micheal Michael Zing, head of ASEAN at Citi, said that even if the integration brings about consolidation, he preferred the financial liberalisation of ASEAN, what he called "the ASEAN way".
Those countries that are ready for liberalisation can go ahead, but those that are not ready will not be open to it.
Singapore, Malaysia and Thailand are three countries that are ready for liberalisation. Each country needs to consider its own levels of financial development, he said.
Chartsiri Sophonpanich, president of Bangkok Bank, said ASEAN integration was attracting investment and tourism, and banks should follow these activities in the region. Bangkok Bank has a presence in every ASEAN country except Brunei.
"As a Thai bank, we have to prepare ourselves well to deal with the opportunities and the competition," he said.
He also noted that attracting talented people would be a challenge for the banking sector as younger people nowadays wanted to run their own businesses, not work for a corporation.
Zink said the advantages so-called Generation Y people had were language skills and good knowledge of technology, the latter being an important tool for the development of banking business.