Bank Negara Malaysia (BNM) was among the first central banks to diversify its foreign reserves into instruments from within the ASEAN region, Governor Tan Sri Zeti Akhtar Aziz said today.

It was a key effort the rating agencies failed to recognise, she said.

"Bank Negara was one of the first central banks to diversify its reserves into instruments from this region because we felt we knew this region although rating agencies didn't give us the ratings we felt we deserved," she said at the Wharton Global Forum 2016.

Zeti later explained that the comment was referring to the action taken by the rating agencies during the Asian financial crisis.

"During the Asian financial crisis they reduced us by two notches, I don't think we deserved that at that time.

"And we went straight to the market in 1999 and engaged directly with the investors. We were able to issue in May 1999 a bond that was oversubscribed by 3.5 times and pricing within the range we expected. Therefore it didn't reflect what the rating agencies did by bringing us down by two notches," she said.

She said BNM, through its own monitoring and surveillance, felt that ASEAN is also where it should diversify reserves into.

"And this not only reduces our vulnerability to external developments but it will contribute towards achieving more stable conditions in the regional financial markets," she said.

The future of ASEAN needs to be built on collective actions that are for the advancements of the region, whereas regional cooperation in the areas of surveillance, financial safety nets and crisis management is crucial, she noted.

"We don't want to wait for another crisis which we all experienced in 1997/98 where we managed it individually ourselves," she said.

Zeti, who is well known for her futuristic policies, said more work needs to be done for greater financial integration in the region.

"Financial integration in the region has not progressed that significantly. ASEAN economies however have reached that stage of development whereby greater regional financial integration can unlock growth potential," she said.

Going forward, the push for regional financial integration is something that ASEAN central banks are doing, she noted.

"It is to bring more effective intermediation of funds, bringing the excess savings from one country and channelling it to productive investments in another," she said.

The ASEAN region, with one of the highest savings rates in the world, has immense potential to meet some of the region's massive requirement for financing, such as for large investment projects or infrastructure development.

Financial integration will facilitate the channelling of funds from the surplus countries towards productive investments in the region, she said.

It will also allow for more efficient risk diversification of assets to include foreign assets within the region, such as Bank Negara's move to diversify its reserves, added Zeti.