The Financial Crisis: A Wake-up Call for Strengthening Regional Monitoring of Financial Markets and Regional Coordination of Financial Sector Policies?

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Asian Development Bank InstituteThe Working Paper series is a continuation of the formerly named Discussion Paper series; the numbering of the papers continued without interruption or change. ADBI's working papers reflect initial ideas on a topic and are posted online for discussion. ADBI encourages readers to post their comments on the main page for each working paper (given in the citation below). Some working papers may develop into other forms of publication. The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of ADBI, the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.Asian Development Bank Institute Kasumigaseki Building 8F 3-2-5 Kasumigaseki, Chiyoda-ku Tokyo 100-6008, JapanTel:+81-3-3593-5500 Fax:+81-3-3593-5571 URL:www.adbi.org E-mail: info@adbi.org AbstractHow much can regional monitoring of financial markets and coordination of financial sector policies contribute to preventing and mitigating financial crises? This paper reviews and compares the experiences of Europe and Asia, which have taken different routes and have achieved different levels of regional financial integration. The analysis suggests that the harmonization and coordination of regulation and supervision, with a strong focus on maturity and currency mismatch problems, would constitute an important step toward mitigating the risk of crisis. However, regional monitoring and coordination will remain difficult as long as lender-of-last-resort activities and fiscal support packages are organized on a national level. Against this background, the crisis is a wake-up call for further progress on monetary integration in Asia along the lines of the reformed Chiang Mai Initiative. In Europe, the crisis reveals the need to establish a sustainable regulatory and supervisory structure that properly defines and reflects the responsibilities of regional and national authorities in crisis management, including its fiscal dimension. JEL Classification: F15, F33, F36, G38

Rebalancing for Sustainable Growth

“…Closer economic relations in the EU and beyond have offered clear benefits (Winkler 2012), not only in terms of improving economic growth but also in terms of withstanding economic shocks. However, the euro remained relatively stable in the early parts of the crisis, so that countries could avoid currency-induced instability that would have otherwise added to their problems.…”

“…They argue, along with Winkler (2012), that there is a role for a regional lender of last resort, which they label the Asian Monetary Fund. Unfortunately, the actions that have been undertaken thus far by the international community have been insufficient.…”

Regional financial regulation in Asia

“…The main challenge seems to be substance, because there is no agreed benchmark to guide regulatory and supervisory convergence (Winkler 2012). These difficulties are compounded by two asymmetries within the EU: the presence of some countries (such as Ireland, Luxembourg, and the United Kingdom) operating international financial centers that often have a vested interest in light regulation; and the integration process between home and host country member states, as regards regulation and supervision of cross-border financial institutions.…”

Propositions pour une « approche combinée » des processus d’intégration économique régionale

“…Son caractère informel permet à chaque pays d'intégrer les réformes à son rythme mais ne laisse pas présager si l'ensemble des pays va continuer à mettre en place ces réformes. 32 Le projet de FMA, qui regroupe les 13 pays de l'ASEAN+3 (Plummer, 2010 ;Winkler, 2010 ;Jetin, 2009), a été proposé une première fois par le Japon dès 1998, rencontrant alors une vive opposition de la part des États-Unis et de la Chine (Higgott, 1998 ;Hamanaka, 2009) 6 . Dix ans plus tard en pleine crise des subprimes, ce projet ressort des cartons comme suite logique à la construction institutionnelle en cours dans la région (ADB, 2010b).…”