Fears of a credit crisis in Asia are abating as funding pressures on European banks ease. That in turn eases the pressure on those banks to shrink their balance sheets by selling assets far from their home markets on the continent.

That is good news for Asia as a whole given its dependence on credit to fuel economic growth, especially since debt capital markets remain under-developed throughout the region.

Still, even a less dramatic pullback from Asia by European banks will create opportunities especially for local players and lead to a transformation of the Asian credit landscape. The improved liquidity of the European banks largely reflects the willingness of the European Central Bank to extend three-year funding to its charges at attractive prices, a programme JPMorgan economists refer to as quantitative easing for the banks.