Due to the fears that the US bailout programme was unable to help prevent the spread of the global financial crisis, world markets took a heavy plunge on Monday, with many indices registering four-year lows.

The Dow dropped 363 points below the crucial 10,000 mark, while Europe's top three markets London, Paris and Frankfurt closed 7% to 9% lower, and the Russian bourse plummeted by a whopping 19%. Asian indices, meanwhile, were slashed between 2% to 3%.

In light of the turbulent global financial market, South Korean president Lee Myung-bak proposed to hold a Korea-China-Japan economic summit and set up a US$80bn Asian fund alongside ASEAN states.

It is commendable that Lee has come up with such a proposal that offers a unique opportunity for Asian countries to reconsider the establishment of an international fund management mechanism which meets the practical requirements of the region at the height of the current crisis while regional governments appear helpless.

The financial crisis has spread from the US to Europe, meaning the economies of these two enormous markets will lose steam significantly, which doesn't augur well for Asia's export-oriented economies. Moreover, the reversal of interest rate trends, from the battling of inflation to the stimulation of growth, has greatly increased the likelihood of six Asian central banks, which would hold their rate-determining meetings this week, to lower their interest rates, forcing Asian currencies to come under heavy attacks on Monday. Even as governments in countries like Malaysia, South Korea, Indonesia and India sold the dollar in a bid to lift the values of their currencies, their efforts have failed to check the slide. Many Asian currencies have slipped to their lowest levels in years, sending a shock wave across financial, trading as well as manufacturing industries across the region. Economists have even predicted that the Great Depression of the 1930s will repeat itself anytime soon.

The staging of Asian economic summit means regional countries have resolved to go their own ways. Although US$80bn is by no means a small sum, given East Asian countries' massive foreign reserves, they should be able to hold up this protective shield against any further assaults.

Perhaps Asian states can take cue from Singapore's sovereign fund model, setting up national investment holding companies which raise their funds by means of issuance of sovereign or company bonds, and converting excess private savings into investments. Most sovereign funds have drawn their inputs chiefly from retirement funds, and are invested mostly in domestic equity. Long term investments should be the most predominant force to stabilise a country's financial market.

The establishment of the Asian fund should serve to prevent the massive inflows of short term international funds which have given rise to the ineffectiveness of fiscal policies and the bubbling of the economy, which in turn disrupt the normal and rational operations of their financial systems.

At this juncture, there are still some obstacles standing the way of forming such a regional fund. The West are worried that the setting up of a regional fund would pose a serious challenge to the IMF, while entrenching the dependence of certain countries. That said, to resolve the current crisis and restore the stability of overall regional finance, it is imperative for Asian states to stand united and expedite the initiation of a mechanism for the collective security of regional economies in a bid to overcome the existing problems. Only by doing so can we get the IMF and World Bank to seriously look into this issue, and offer the necessary assistance.

It remains yet to be seen whether Asia's Big Three will play a more proactive role in the region in tackling the financial crisis. Washington's attitude towards this Asian economic summit also plays a decisive role.

During the past few financial crises, when regional countries were badly bruised, only a handful international financial experts offered occasional proposals from the perspectives of Asian countries to restore the integrity of regional finance, while Western leaders remained largely indifferent. Instead, they were harshly critical when Hong Kong government intervened in the market and Malaysia imposed the exchange control policy.

This is a realistic world in which powerful nations dictate the rules of the game. It is now time for us to decide our own rules. On top of that, the rules must also stress the importance of enhanced transparency and market regulation.

Asian countries must have their own say in financial market liberalisation; they do not need to follow the footsteps of capital-rich Western countries. The Asian economic summit and raising of regional fund proposed by Korea should be seen as both an opportunity as well as challenge for Asian countries. (Translated by DOMINIC LOH/Sin Chew Daily)