- Ratna Sahay, Cheng Lim, Chikahisa Sumi, James Walsh, and Jerald Schiff
- Published Date:
- August 2015
The Future of Asian Finance
Ratna Sahay, Jerald Schiff, Cheng Hoon Lim, Chikahisa Sumi, and James P. Walsh
© 2015 International Monetary Fund
Cover design: IMF Multimedia Services Division
Joint Bank-Fund Library
The future of Asian finance / edited by Ratna Sahay, Jerald Schiff, Cheng Hoon Lim, Chikahisa Sumi, and James P. Walsh. – Washington, D.C. : International Monetary Fund, 2015.
- pages ; cm.
Includes bibliographical references and index.
1. Finance – Asia. 2. Economic development – Asia. 3. Asia – Economic conditions. I. Sahay, Ratna. II. Schiff, Jerald Alan. III. Lim, C. H. (Cheng Hoon). IV. Sumi, Chikahisa. V. Walsh, James P. (James Patrick), 1972- VI. International Monetary Fund.
Disclaimer: The views expressed in this book are those of the authors and do not necessarily represent the views of the International Monetary Fund, its Executive Board, or management.
Please send orders to:
International Monetary Fund, Publication Services
P.O. Box 92780, Washington, DC 20090, U.S.A.
Tel.: (202) 623-7430 Fax: (202) 623-7201
- Part I The Structure of Finance in Asia
- 1 | Introduction
- Ratna Sahay, Jerald Schiff, Cheng Hoon Lim, and Chikahisa Sumi
- 2 | A Bird’s-Eye View of Finance in Asia
- Heedon Kang, Phakawa Jeasakul, and Cheng Hoon Lim
- 3 | Are There Crouching Tigers and Hidden Dragons in Asia’s Stock Markets?
- Fabian Lipinsky and Li Lian Ong
- 4 | Bond Markets: Are Recent Reforms Working?
- Mangal Goswami, Andreas Jobst, Shanaka J. Peiris, and Dulani Seneviratne
- Part II Where Is Asia Going?
- 5 | Is Asia Still Resilient?
- Phakawa Jeasakul, Cheng Hoon Lim, and Erik Lundback
- 6 | The Future of Asia’s Financial Sector
- Rina Bhattacharya, Fei Han, and James P. Walsh
- 7 | Hong Kong SAR and Singapore as Asian Financial Centers—Complementarity and Stability
- Vanessa le Leslé, Franziska Ohnsorge, Minsuk Kim, and Srikant Seshadri
- Part III Challenges Ahead
- 8 | Asia’s Demographic Changes and Infrastructure Needs: How Can the Financial Sector Address These Challenges?
- Ding Ding, W. Raphael Lam, and Shanaka J. Peiris
- 9 | ASEAN Financial Integration: Harnessing Benefits and Mitigating Risks
- Geert Almekinders, Alex Mourmouras, Jade Vichyanond, Yong Sarah Zhou, and Jianping Zhou
- 10 | Capital Flows: A Prospective View
- Edda Zoli, Sergei Dodzin, Wei Liao, and Wojciech Maliszewski
- 11 | Operating within the New Global Regulatory Environment
- Rina Bhattacharya, James P. Walsh, and Aditya Narain
Recognizing the increasingly important role finance will play in Asia, the International Monetary Fund (IMF) embarked on the “Future of Asia’s Finance” project in early 2013. Our aim was to take stock of Asia’s financial systems and chart possible paths that it might take to meet the rising economic expectations of its vast population and finance its increasingly consumption-based growth models.
The IMF is committed to playing a supportive role in helping its Asian member countries achieve the twin goals of inclusive growth and financial stability. These goals need to be considered in the context of major ongoing changes in the global financial system following the global financial crisis in 2008, as well as demographic shifts, rapid urbanization, large infrastructure needs, and the evolving structure of economic activity in Asia itself.
Asia demonstrated remarkable resilience throughout the global financial crisis and its aftermath. Although some export-dependent economies were hit hard, the region as a whole recovered quickly and reestablished itself as the global growth leader. One key reason for Asia’s resilience was that the region’s financial sector was in much better shape than many countries in the West, a sharp contrast to the experience during the Asian financial crisis in the second half of the 1990s. Looking ahead, Asia’s relatively conservative business model, a strength going into the global financial crisis, may become a constraint if it holds back further development of the financial sector, such as equity and bond markets and long-term investor bases, that are needed for continued strong growth.
Although Asia’s financial sector has been successful in supporting growth, sustaining the region’s impressive growth momentum will require the financial sector to innovate further. There is tremendous potential to better manage and mobilize Asia’s large savings to finance the region’s human capital and infrastructure investment needs. Capital markets need to deepen further to strengthen financial intermediation and risk sharing, diversify sources of funding, and mitigate capital flow volatility. By moving in this direction, the financial sector will help Asia meet the challenges of population aging, reduce gaps between the rich and the poor, and escape the so-called middle-income trap. Given the growing size and influence of the Asian economies, a sound and dynamic financial sector in Asia will also be beneficial to the rest of the world.
So far the IMF’s work on the “Future of Asia’s Finance” project has focused on taking stock of Asian financial systems and their resilience to global stresses, as well as how they can be retooled to address demographic shifts and infrastructure needs and adapt to the new global regulatory regime. In this context, we have held several public events in the past two years.
- “The Future of Asia’s Finance” seminar during the April 2013 IMF-World Bank Spring Meetings outlined the challenges facing Asia’s financial sectors and provided a starting point for many of the topics in this book.
- The Joint IMF-Hong Kong Monetary Authority (HKMA) Conference, “The Future of Asia’s Finance,” held in February 2014, brought together government, private sector, think tank, and other representatives from the region to discuss the role of finance in Asia, including managing capital flows and dealing with regulatory reforms.
- At the October 2014 IMF-World Bank Annual Meetings Flagship Seminar, “Financing Asia’s New Growth Models,” a high-level panel discussed how to ensure sustainable, high-quality growth in Asia and how financial systems should respond to these challenges.
Drawing on the lessons from our previous and ongoing work, including the key takeaways from the seminars noted above, this book attempts to provide a comprehensive assessment of the state of Asia’s financial sector, the challenges going forward, and further changes that can be expected. It also proposes policy responses to address the region’s present and future challenges. Lessons learned from cross-country experiences are valuable and yet they need to be applied to Asia with care, recognizing the region’s many unique characteristics and the wide diversity of financial systems within the region.
Through the “Future of Asia’s Finance” project, the IMF intends to continue serving as an international forum for its Asian members for discussing the challenges faced by its financial systems to meet Asia’s twin goals of sustaining high growth and financial stability.
Deputy Managing Director
International Monetary Fund
Cheng Hoon Lim is Assistant Director in the Monetary and Capital Markets Department of the IMF. She is responsible for leading and implementing the department’s strategic priorities on macro-financial surveillance and review for advanced and emerging market economies. She has led IMF teams to assess the stability of financial systems in recent years and has worked extensively on IMF programs during the Asian crisis in the late 1990s and early 2000s. Ms. Lim has produced seminal work on the effectiveness of macroprudential policy instruments in mitigating systemic risk. She has also published on other topics, including inflation targeting, sovereign debt crisis and restructuring, contingent claims analysis of banking and corporate sectors, and the future of finance in Asia. In addition to the IMF, Ms. Lim has worked at the UK Financial Services Authority and the World Bank. Ms. Lim received her PhD from Cambridge University.
Ratna Sahay is Deputy Director of the Monetary and Capital Markets Department at the IMF. She is responsible for setting strategic priorities for the department, leading key projects on policy, and coordinating the work and resource management of the department. She has previously worked in the Research, Finance, Asian, European, Middle East, and Western Hemisphere Departments at the IMF, leading key analytical and policy projects as well as several missions to emerging market countries. She has also led regional surveillance projects and missions in the Middle East and Western Hemisphere Departments. She has served as Advisor to Stanley Fischer (First Deputy Managing Director) and Michael Mussa and Kenneth Rogoff (both Economic Counselors of the IMF). She has published widely in leading journals on financial market spillovers and financial crises, inflation, economic growth, fiscal policy and debt sustainability, and transition economies. She has taught at Delhi University, Columbia University, and New York University and holds a PhD in Economics from New York University.
Jerald Schiff is Deputy Director of the Asia and Pacific Department (APD) and IMF Mission Chief for Japan. He has previously served as a Senior Advisor in the Office of the Managing Director, Assistant Director of APD, and Divison Chief in the European Department. Mr. Schiff received his AB at Cornell University and MS and PhD degrees at the University of Wisconsin. He has also taught at Tulane University and American University School of International Service and worked in the U.S. Department of Treasury.
Chikahisa Sumi is Assistant Director in the Asia and Pacific Department (APD) of the IMF. He is APD’s lead on the “Future of Asia’s Finance” project. He is also Mission Chief for the Philippines and New Zealand. Mr. Sumi has also held key positions in the Japanese government, including Deputy Vice Minister of Finance and Deputy Commissioner of the Financial Services Agency. He also headed Japan’s Debt Management Office. Born in Osaka, Japan, Mr. Sumi holds an LLB from the University of Tokyo (1982) and an MBA from Harvard University (1986).
Geert Almekinders is a Deputy Division Chief in the IMF’s Asia and Pacific Department.
Rina Bhattacharya is a Senior Economist in the Monetary and Capital Markets Department at the IMF.
Ding Ding is a Senior Economist in the Asia and Pacific Department at the IMF.
Sergei Dodzin is a Senior Economist in the Asia and Pacific Department at the IMF.
Mangal Goswami is currently the Assistant to the Director at the IMF–Singapore Regional Training Institute.
Fei Han is an Economist in the Monetary and Capital Markets Department at the IMF.
Phakawa Jeasakul is an Economist in the Monetary and Capital Markets Department at the IMF.
Andreas Jobst is a Senior Economist in the IMF’s European Department.
Heedon Kang is a Financial Sector Expert in the Monetary and Capital Markets Department at the IMF.
Minsuk Kim is an Economist in the Strategy, Policy, and Review Department at the IMF.
Yitae Kevin Kim is a Senior Financial Expert in the IMF’s Monetary and Capital Markets Department.
Raphael W. Lam is the IMF’s Deputy Resident Representative in China.
Vanessa le Leslé is Deputy Head of Global Regulatory Strategy and Policy for Asia Pacific, at JP Morgan Hong Kong and was Senior Financial Expert at the IMF until 2013.
Wei Liao is an Economist in the Asia and Pacific Department of the IMF.
Fabian Lipinsky is an Economist in the Western Hemisphere Department at the IMF.
Erik Lundback is a Senior Economist in the Monetary and Capital Markets Department at the IMF.
Wojciech S. Maliszewski is a Senior Economist working on China and Hong Kong in the IMF’s Asia and Pacific Department.
Alex Mourmouras is a Division Chief in the IMF’s Asia and Pacific Department.
Aditya Narain is Deputy Director of the IMF’s Monetary and Capital Markets Department.
Franziska Ohnsorge is a Lead Economist in the Development Prospects Group (DECPG) at the International Bank for Reconstruction and Development, and was Senior Economist at the IMF until 2014.
Li Lian Ong is Senior Vice President at GIC Private Limited, Singapore. She was Deputy Division Chief in the Monetary and Capital Markets Department of the IMF until 2014.
Shanaka Jayanath Peiris is the IMF’s Resident Representative to the Philippines.
Srikant Seshadri is the IMF’s Senior Resident Representative in Turkey.
Dulani Seneviratne is a Research Officer in the Regional Studies Division of the IMF’s Asia and Pacific Department.
Jongsoon Shin is an Economist in the IMF’s Asia and Pacific Department.
Jade Vichyanond is an economist in the IMF’s Asia and Pacific Department, Macroeconomic Research Division.
James P. Walsh is Deputy Division Chief in the Monetary and Capital Markets Department at the IMF.
Jianping Zhou is a Senior Economist in the Monetary and Capital Markets Department at the IMF.
Yong Sarah Zhou is a Senior Economist in the IMF’s Asia and Pacific Department.
Edda Zoli is a Senior Economist in the IMF’s Asia and Pacific Department.