After Brexit, Asia should strengthen its regional safety net

THE shocking decision of the United Kingdom to pull out of the European Union has reverberated around the world. Financial markets have been jittery.

In the UK, the centre of the storm, the pound sterling has plunged at one point to a four-decade low and the FTSE has fallen sharply. Moody's quickly downgraded the UK's credit rating from stable to negative and a number of American banks in London have initiated the process of relocating to other European capitals. The Bank of England has announced a £250 billion (S$452 billion) contingent facility.

"Contagion" effects of "Brexit" have been felt worldwide. In the United States, the Dow Jones plunged by more than 500 points last Friday. Asian markets also crumbled with Tokyo's Nikkei falling by 7.9 per cent, its worst fall since March 2011. Hong Kong's Hang Seng fell by 2.9 per cent and Singapore's benchmark Strait Times Index by 2 per cent.