echoes of the asian financial crisis in reverse: capital controls...
TRANSCRIPT
Echoes of the Asian Financial Crisis in Reverse:Capital Controls and Currency Wars in the Wake of
the Global Financial CrisisPerspectives from EMEs with Comparative Case Studies of China
and South Korea
June Park
Department of Political ScienceBoston University
August 22, 2012 / GR:EEN GEM PhD School, Fudan University,Shanghai, PRC
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 1 / 20
Outline
1 I. IntroductionEscalation to the AFC and the GFC
2 II. The GFC Escalation to a Global Currency WarU.S. Policy ActionsEMEs Response to Capital Flows
3 III. Comparative Cases of EMEs: South Korea and ChinaSouth KoreaChina
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 2 / 20
I. Introduction From Asian to Global Financial Crisis
Outline
1 I. IntroductionEscalation to the AFC and the GFC
2 II. The GFC Escalation to a Global Currency WarU.S. Policy ActionsEMEs Response to Capital Flows
3 III. Comparative Cases of EMEs: South Korea and ChinaSouth KoreaChina
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 3 / 20
I. Introduction From Asian to Global Financial Crisis
From Asian to Global Financial CrisisThe Asian Financial Crisis, 1997-1998
Escalation to the AFC. . .Hot Money, Capital Flight, Currency and MaturityMismatch, Financial CrisisThailand -> Indonesia -> Malaysia -> South Korea
Government and Financial Sector CorruptionStrongly Attached Government-Business RelationsLack of Foreign Exchange ReservesPremature Financial Regulatory Systems
IMF Guidelines and Austerity MeasuresWere they Necessary?Were they Appropriate?
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 4 / 20
I. Introduction From Asian to Global Financial Crisis
From Asian to Global Financial CrisisThe Asian Financial Crisis, 1997-1998
Escalation to the AFC. . .Hot Money, Capital Flight, Currency and MaturityMismatch, Financial CrisisThailand -> Indonesia -> Malaysia -> South Korea
Government and Financial Sector CorruptionStrongly Attached Government-Business RelationsLack of Foreign Exchange ReservesPremature Financial Regulatory Systems
IMF Guidelines and Austerity MeasuresWere they Necessary?Were they Appropriate?
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 4 / 20
I. Introduction From Asian to Global Financial Crisis
From Asian to Global Financial CrisisThe Asian Financial Crisis, 1997-1998
Escalation to the AFC. . .Hot Money, Capital Flight, Currency and MaturityMismatch, Financial CrisisThailand -> Indonesia -> Malaysia -> South Korea
Government and Financial Sector CorruptionStrongly Attached Government-Business RelationsLack of Foreign Exchange ReservesPremature Financial Regulatory Systems
IMF Guidelines and Austerity MeasuresWere they Necessary?Were they Appropriate?
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 4 / 20
I. Introduction From Asian to Global Financial Crisis
From Asian to Global Financial CrisisThe Asian Financial Crisis, 1997-1998
Escalation to the AFC. . .Hot Money, Capital Flight, Currency and MaturityMismatch, Financial CrisisThailand -> Indonesia -> Malaysia -> South Korea
Government and Financial Sector CorruptionStrongly Attached Government-Business RelationsLack of Foreign Exchange ReservesPremature Financial Regulatory Systems
IMF Guidelines and Austerity MeasuresWere they Necessary?Were they Appropriate?
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 4 / 20
I. Introduction From Asian to Global Financial Crisis
From Asian to Global Financial CrisisThe Asian Financial Crisis, 1997-1998
Escalation to the AFC. . .Hot Money, Capital Flight, Currency and MaturityMismatch, Financial CrisisThailand -> Indonesia -> Malaysia -> South Korea
Government and Financial Sector CorruptionStrongly Attached Government-Business RelationsLack of Foreign Exchange ReservesPremature Financial Regulatory Systems
IMF Guidelines and Austerity MeasuresWere they Necessary?Were they Appropriate?
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 4 / 20
I. Introduction From Asian to Global Financial Crisis
From Asian to Global Financial CrisisThe Asian Financial Crisis, 1997-1998
Escalation to the AFC. . .Hot Money, Capital Flight, Currency and MaturityMismatch, Financial CrisisThailand -> Indonesia -> Malaysia -> South Korea
Government and Financial Sector CorruptionStrongly Attached Government-Business RelationsLack of Foreign Exchange ReservesPremature Financial Regulatory Systems
IMF Guidelines and Austerity MeasuresWere they Necessary?Were they Appropriate?
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 4 / 20
I. Introduction From Asian to Global Financial Crisis
From Asian to Global Financial CrisisThe Interval Between the Crises, 1997-1998
Changes to the Global Economy. . .China’s Accession to the WTO with PNTR status, 9.11 / The Waron Iraq and Increased U.S. Defense Spending, the Rise of BRICs,Japan’s Prolonged Deflation. . .
AndChina’s Rapid Economic Growth and Expansion toOther Regions of the Globe
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 5 / 20
I. Introduction From Asian to Global Financial Crisis
From Asian to Global Financial CrisisThe Global Financial Crisis, 2008-2012
Escalation to the GFC. . .Lending Decisions by Institutions -> Borrowing Decisions byIndividuals -> Lack of Financial Surveillance and Regulations ->Housing Market Collapse –> Bank Failures and Financial MarketCollapse –> Government and Industry Responses and SystemicRescue
Systemic Rescue: QE1, QE2, ZIRP by the FRB
Impacts on EMEs: Capital Inflows from the CarryTrade, Exchange Rate Fluctuations from theUnstable USD, and the Onset of CompetitiveDevaluation(Currency Wars)
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 6 / 20
II. The GFC Escalation to a Global Currency War Another Financial Crisis in a Decade: U.S. Policy Actions
Outline
1 I. IntroductionEscalation to the AFC and the GFC
2 II. The GFC Escalation to a Global Currency WarU.S. Policy ActionsEMEs Response to Capital Flows
3 III. Comparative Cases of EMEs: South Korea and ChinaSouth KoreaChina
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 7 / 20
II. The GFC Escalation to a Global Currency War Another Financial Crisis in a Decade: U.S. Policy Actions
U.S. Govt. Bail-Outs of Too-Big-To-Fail Institutions
Bear Stearns
Mortgage Giants: Fannie Mae, Freddie Mac, Ginnie Mae
Investment Banks: Goldman Sachs, Morgan Stanley, JP MorganChase
AIG
Citigroup
Bank of America
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 8 / 20
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TBTF$Bail(Outs$(Unit:$$USD$Trillion)$$Source:$Government$Accountability$Office$Audit$of$the$U.S.$Federal$Reserve$(July$2011)$
TBTF"BailBOuts"(Unit:"$USD"Trillion)""
0" 100" 200" 300" 400" 500" 600" 700" 800" 900" 1000"
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Bear"Stearns"
Goldman"Sachs"
Royal"Bank"of"Scotland"
JP"Morgan"Chase"
Deutsche"Bank"
UBS"
Credit"Suisse"
Lehman"Brothers"
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Addi$onal)Bail+Outs)(Unit:)$USD)Billion))Source:)Government)Accountability)Office)Audit)of)the)U.S.)Federal)Reserve)(July)2011))
AddiPonal"BailQOuts"(Unit:"$USD"Billion)"
II. The GFC Escalation to a Global Currency War Another Financial Crisis in a Decade: U.S. Policy Actions
The FRB’s Zero Interest Rate Policy (ZIRP)
ZIRP: A ’non-conventional’ monetary policy used when there areno further ways to lower the interest rates to stimulate theeconomy
The Conventional Method: Central banks buy or sell governmentbonds to target at market interest rates, affecting interbankinterest rates
Lowering Interest Rates: -> enables cheap moneyborrowing -> boost borrowing from banks forinvestors and also increases intra-bank lending
FRB (Dec. 16, 2008) and ECB: risk-free short-term nominalinterest rates at zero, quantitative easings follow
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 9 / 20
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U.S.$Federal$Funds$Rate,$199242011$(Percent$Per$Year)$Source:$U.S.$Bank$of$Governors$of$the$Federal$Reserve$System$
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II. The GFC Escalation to a Global Currency War Another Financial Crisis in a Decade: U.S. Policy Actions
U.S. Quantitative Easing (Q1/Q2)
Quantitative Easing: maintain economic stability (interest rate andunemployment rate), easy borrowing, consumption, stimulation ofthe economy
Why does it matter to the EMEs?: Shifts the investors toturn to countries with higher interest rates,inducing capital flows and local currencyexchange rate fluctuations
U.S. QE1 (Nov. 25, 2008 - March 31, 2010) : ExtraordinaryExtension of Credit (Liquidity): term action facility, discountwindow for security firms, lending to money market mutual funds
U.S. QE2 (Nov. 3, 2010 - June 30, 2011) : Large-Asset Purchases(LSAPs): FRB purchase of longer-term treasury securities,agency mortgage-backed securities (a total of USD 1.25 trillion),agency debt purchases (USD 175 billion) - corporate bonds andequity
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 10 / 20
II. The GFC Escalation to a Global Currency War Another Financial Crisis in a Decade: U.S. Policy Actions
The ECB’s Long-Term Refinancing Operations (LTRO)
LTRO (Dec. 2011) : A 3-year Longer-Term RefinancingOperations that enables European banks for a cheap loan to avoidliquidity trap, credit crunch or banking system collapse
Equivalent to the QEs of the FRB and the BOE - previous cases(Japan, Hong Kong)
The overlap of FRB and ECB QEs together impactedthe EMEs considerably.
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 11 / 20
II. The GFC Escalation to a Global Currency War EMEs Responses to the GFC
Outline
1 I. IntroductionEscalation to the AFC and the GFC
2 II. The GFC Escalation to a Global Currency WarU.S. Policy ActionsEMEs Response to Capital Flows
3 III. Comparative Cases of EMEs: South Korea and ChinaSouth KoreaChina
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 12 / 20
II. The GFC Escalation to a Global Currency War EMEs Responses to the GFC
EMEs Response to the GFC and Capital FlowsThe G20 and the Move for Capital Controls
Asia showed the fastest recovery from the GFC, equipped withfinancial stability means and excess reserves
In Response to Capital Flows: Voiced the risks and irregularitiesof capital inflows and outflows (hot money)
In the Global Policy Platform: IMF position reversal on capitalflows, G20 Summits call for regulation of capital flows
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 13 / 20
II. The GFC Escalation to a Global Currency War EMEs Responses to the GFC
Currency WarsThe Revival of ’Beggar-Thy-Neighbour’ Policies
’Beggar-Thy-Neighbour’ (Kindleberger) : remedying domesticeconomic troubles by measures that worsen economic troubles ofother countries
ZIRP and Subsequent QEs -> US Dollar Weakens ->EMEs local currencies closely linked to the U.S.economy via the dollar peg -> EMEs strive todefend their currencies by competitivedevaluation
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 14 / 20
II. The GFC Escalation to a Global Currency War EMEs Responses to the GFC
Rethinking Global ImbalancesThe Advent of an EMEs-Based World Economy
’The Triffin Dilemma’ a Reality for the U.S.: A national currencythat also serves as an international reserve currency compels thecountry to have conflicts of interests between short-term domesticand long-term international economic interests.
Predestined Fate of the Dollar: serving foreign economieswith ample supply of the global reserve currencyto fulfill the demands, resulting in a currentaccount deficit
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 15 / 20
III. Comparative Cases of EMEs: South Korea and China South Korea’s Financial Reforms, 1948-2012
Outline
1 I. IntroductionEscalation to the AFC and the GFC
2 II. The GFC Escalation to a Global Currency WarU.S. Policy ActionsEMEs Response to Capital Flows
3 III. Comparative Cases of EMEs: South Korea and ChinaSouth KoreaChina
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 16 / 20
III. Comparative Cases of EMEs: South Korea and China South Korea’s Financial Reforms, 1948-2012
South Korea’s Post-Asian Financial Crisis andPost-Global Financial Crisis
South Korea’s 5 Stages of Financial Reform1950s-1960s: fundamentals build-up1970s-1980s: adoption of legal and institutional measures1980s-1990s: financial autonomy in a booming period1990s-2000s: financial liberalization and the AFC2000s and beyond: advancement of the financial system aftersubsequent reforms
Measures after the AFC ExperienceCapital and Financial Market Liberalization: privatization andrestructuring, foreign banks’ presenceExcess Reserves and the Advancement of the Financial System:ensuring liquidity and stability of the marketMacro-prudential Measures (Post-GFC): macro prudentiallevy, ceilings on foreign sales of derivatives,etc
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 17 / 20
III. Comparative Cases of EMEs: South Korea and China South Korea’s Financial Reforms, 1948-2012
South Korea’s Post-Asian Financial Crisis andPost-Global Financial Crisis
South Korea’s 5 Stages of Financial Reform1950s-1960s: fundamentals build-up1970s-1980s: adoption of legal and institutional measures1980s-1990s: financial autonomy in a booming period1990s-2000s: financial liberalization and the AFC2000s and beyond: advancement of the financial system aftersubsequent reforms
Measures after the AFC ExperienceCapital and Financial Market Liberalization: privatization andrestructuring, foreign banks’ presenceExcess Reserves and the Advancement of the Financial System:ensuring liquidity and stability of the marketMacro-prudential Measures (Post-GFC): macro prudentiallevy, ceilings on foreign sales of derivatives,etc
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 17 / 20
III. Comparative Cases of EMEs: South Korea and China South Korea’s Financial Reforms, 1948-2012
South Korea’s Post-Asian Financial Crisis andPost-Global Financial Crisis
South Korea’s 5 Stages of Financial Reform1950s-1960s: fundamentals build-up1970s-1980s: adoption of legal and institutional measures1980s-1990s: financial autonomy in a booming period1990s-2000s: financial liberalization and the AFC2000s and beyond: advancement of the financial system aftersubsequent reforms
Measures after the AFC ExperienceCapital and Financial Market Liberalization: privatization andrestructuring, foreign banks’ presenceExcess Reserves and the Advancement of the Financial System:ensuring liquidity and stability of the marketMacro-prudential Measures (Post-GFC): macro prudentiallevy, ceilings on foreign sales of derivatives,etc
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 17 / 20
III. Comparative Cases of EMEs: South Korea and China South Korea’s Financial Reforms, 1948-2012
South Korea’s Post-Asian Financial Crisis andPost-Global Financial Crisis
South Korea’s 5 Stages of Financial Reform1950s-1960s: fundamentals build-up1970s-1980s: adoption of legal and institutional measures1980s-1990s: financial autonomy in a booming period1990s-2000s: financial liberalization and the AFC2000s and beyond: advancement of the financial system aftersubsequent reforms
Measures after the AFC ExperienceCapital and Financial Market Liberalization: privatization andrestructuring, foreign banks’ presenceExcess Reserves and the Advancement of the Financial System:ensuring liquidity and stability of the marketMacro-prudential Measures (Post-GFC): macro prudentiallevy, ceilings on foreign sales of derivatives,etc
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 17 / 20
III. Comparative Cases of EMEs: South Korea and China South Korea’s Financial Reforms, 1948-2012
South Korea’s Post-Asian Financial Crisis andPost-Global Financial Crisis
South Korea’s 5 Stages of Financial Reform1950s-1960s: fundamentals build-up1970s-1980s: adoption of legal and institutional measures1980s-1990s: financial autonomy in a booming period1990s-2000s: financial liberalization and the AFC2000s and beyond: advancement of the financial system aftersubsequent reforms
Measures after the AFC ExperienceCapital and Financial Market Liberalization: privatization andrestructuring, foreign banks’ presenceExcess Reserves and the Advancement of the Financial System:ensuring liquidity and stability of the marketMacro-prudential Measures (Post-GFC): macro prudentiallevy, ceilings on foreign sales of derivatives,etc
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 17 / 20
III. Comparative Cases of EMEs: South Korea and China South Korea’s Financial Reforms, 1948-2012
South Korea’s Post-Asian Financial Crisis andPost-Global Financial Crisis
South Korea’s 5 Stages of Financial Reform1950s-1960s: fundamentals build-up1970s-1980s: adoption of legal and institutional measures1980s-1990s: financial autonomy in a booming period1990s-2000s: financial liberalization and the AFC2000s and beyond: advancement of the financial system aftersubsequent reforms
Measures after the AFC ExperienceCapital and Financial Market Liberalization: privatization andrestructuring, foreign banks’ presenceExcess Reserves and the Advancement of the Financial System:ensuring liquidity and stability of the marketMacro-prudential Measures (Post-GFC): macro prudentiallevy, ceilings on foreign sales of derivatives,etc
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 17 / 20
III. Comparative Cases of EMEs: South Korea and China South Korea’s Financial Reforms, 1948-2012
South Korea’s Post-Asian Financial Crisis andPost-Global Financial Crisis
South Korea’s 5 Stages of Financial Reform1950s-1960s: fundamentals build-up1970s-1980s: adoption of legal and institutional measures1980s-1990s: financial autonomy in a booming period1990s-2000s: financial liberalization and the AFC2000s and beyond: advancement of the financial system aftersubsequent reforms
Measures after the AFC ExperienceCapital and Financial Market Liberalization: privatization andrestructuring, foreign banks’ presenceExcess Reserves and the Advancement of the Financial System:ensuring liquidity and stability of the marketMacro-prudential Measures (Post-GFC): macro prudentiallevy, ceilings on foreign sales of derivatives,etc
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 17 / 20
III. Comparative Cases of EMEs: South Korea and China South Korea’s Financial Reforms, 1948-2012
South Korea’s Post-Asian Financial Crisis andPost-Global Financial Crisis
South Korea’s 5 Stages of Financial Reform1950s-1960s: fundamentals build-up1970s-1980s: adoption of legal and institutional measures1980s-1990s: financial autonomy in a booming period1990s-2000s: financial liberalization and the AFC2000s and beyond: advancement of the financial system aftersubsequent reforms
Measures after the AFC ExperienceCapital and Financial Market Liberalization: privatization andrestructuring, foreign banks’ presenceExcess Reserves and the Advancement of the Financial System:ensuring liquidity and stability of the marketMacro-prudential Measures (Post-GFC): macro prudentiallevy, ceilings on foreign sales of derivatives,etc
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 17 / 20
INFLOWS((
PERIOD(
OUTFLOWS((
PERIOD(
Unit:(Billion(USD(
Capital'Flows'Criteria'Stocks:(Net(Inflows(and(Ou=lows(of(Foreigners'(Investment(in(Stocks(
Bonds:(Net(Inflows(and(Ou=lows(of(Foreigners'(Investment(in(Bonds(
*(Borrowing(from(Foreign(Banks(
among(ShortHTerm(Borrowing(are(
based(on(Foreign(Loans((stocks)(
staLsLcs((
!Stocks(13.4'Billion'USD'!Bonds(38.6'Billion'USD'!ShortHterm(Borrowing:(26.1'Billion'USD'(Borrowing(from(Foreign(Banks:((
11.1'Billion'USD,''97.12)(!Stocks(0.8'Billion'USD'!Bonds(123.8'Billion'USD'!ShortHterm(Borrowing:(97.3'Billion'USD'(Borrowing(from(Foreign(Banks:((
71.5'Billion'USD,''08.9)(
!Stocks(36.6'Billion'USD'!Bonds(31.0'Billion'USD'!ShortHterm(Borrowing:(14.0'Billion'USD'(Borrowing(from(Foreign(Banks:((
7.3'Billion'USD,''10.3)(
!Stocks(2.1'Billion'USD'!Bonds(C1.6'Billion'USD'!ShortHterm(Borrowing:(C22.0'Billion'USD'(Borrowing(from(Foreign(Banks:((
C3.1'Billion'USD,''98.3)(
!Stocks(C7.4'Billion'USD'!Bonds(C13.4'Billion'USD'!ShortHterm(Borrowing:(C48.7'Billion'USD'(Borrowing(from(Foreign(Banks:((
C25.7'Billion'USD,''08.12)(
III. Comparative Cases of EMEs: South Korea and China China’s Financial Reforms, 1978-2012
Outline
1 I. IntroductionEscalation to the AFC and the GFC
2 II. The GFC Escalation to a Global Currency WarU.S. Policy ActionsEMEs Response to Capital Flows
3 III. Comparative Cases of EMEs: South Korea and ChinaSouth KoreaChina
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 18 / 20
III. Comparative Cases of EMEs: South Korea and China China’s Financial Reforms, 1978-2012
China’s Post-Global Financial Crisis
China’s 5 Stages of Financial Reform1978-1984: establishment of institutional means1985-1996: opportunities of changes in the financial system1997-2005: adjustments and solidification of the financial system2006-2008(GFC): further developments in the financial systemaccording to 2001 WTO accession2008-Present: drive for financial liberalization
Condensed Form of Financial Market DevelopmentStartup of a Financial Market in Acceleration: 4 Major Banksand the PBOC, Commercial Banks and StockExchangesFinancial Reforms after the AFC call for more Financial Reforms:NPLsFinancial Liberalization amidst Contest with Advanced Economies:expansion of channels, issue of internationaltransactions remains, RMB internationalization,SDR, SWFs
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 19 / 20
III. Comparative Cases of EMEs: South Korea and China China’s Financial Reforms, 1978-2012
China’s Post-Global Financial Crisis
China’s 5 Stages of Financial Reform1978-1984: establishment of institutional means1985-1996: opportunities of changes in the financial system1997-2005: adjustments and solidification of the financial system2006-2008(GFC): further developments in the financial systemaccording to 2001 WTO accession2008-Present: drive for financial liberalization
Condensed Form of Financial Market DevelopmentStartup of a Financial Market in Acceleration: 4 Major Banksand the PBOC, Commercial Banks and StockExchangesFinancial Reforms after the AFC call for more Financial Reforms:NPLsFinancial Liberalization amidst Contest with Advanced Economies:expansion of channels, issue of internationaltransactions remains, RMB internationalization,SDR, SWFs
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 19 / 20
III. Comparative Cases of EMEs: South Korea and China China’s Financial Reforms, 1978-2012
China’s Post-Global Financial Crisis
China’s 5 Stages of Financial Reform1978-1984: establishment of institutional means1985-1996: opportunities of changes in the financial system1997-2005: adjustments and solidification of the financial system2006-2008(GFC): further developments in the financial systemaccording to 2001 WTO accession2008-Present: drive for financial liberalization
Condensed Form of Financial Market DevelopmentStartup of a Financial Market in Acceleration: 4 Major Banksand the PBOC, Commercial Banks and StockExchangesFinancial Reforms after the AFC call for more Financial Reforms:NPLsFinancial Liberalization amidst Contest with Advanced Economies:expansion of channels, issue of internationaltransactions remains, RMB internationalization,SDR, SWFs
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 19 / 20
III. Comparative Cases of EMEs: South Korea and China China’s Financial Reforms, 1978-2012
China’s Post-Global Financial Crisis
China’s 5 Stages of Financial Reform1978-1984: establishment of institutional means1985-1996: opportunities of changes in the financial system1997-2005: adjustments and solidification of the financial system2006-2008(GFC): further developments in the financial systemaccording to 2001 WTO accession2008-Present: drive for financial liberalization
Condensed Form of Financial Market DevelopmentStartup of a Financial Market in Acceleration: 4 Major Banksand the PBOC, Commercial Banks and StockExchangesFinancial Reforms after the AFC call for more Financial Reforms:NPLsFinancial Liberalization amidst Contest with Advanced Economies:expansion of channels, issue of internationaltransactions remains, RMB internationalization,SDR, SWFs
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 19 / 20
III. Comparative Cases of EMEs: South Korea and China China’s Financial Reforms, 1978-2012
China’s Post-Global Financial Crisis
China’s 5 Stages of Financial Reform1978-1984: establishment of institutional means1985-1996: opportunities of changes in the financial system1997-2005: adjustments and solidification of the financial system2006-2008(GFC): further developments in the financial systemaccording to 2001 WTO accession2008-Present: drive for financial liberalization
Condensed Form of Financial Market DevelopmentStartup of a Financial Market in Acceleration: 4 Major Banksand the PBOC, Commercial Banks and StockExchangesFinancial Reforms after the AFC call for more Financial Reforms:NPLsFinancial Liberalization amidst Contest with Advanced Economies:expansion of channels, issue of internationaltransactions remains, RMB internationalization,SDR, SWFs
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 19 / 20
III. Comparative Cases of EMEs: South Korea and China China’s Financial Reforms, 1978-2012
China’s Post-Global Financial Crisis
China’s 5 Stages of Financial Reform1978-1984: establishment of institutional means1985-1996: opportunities of changes in the financial system1997-2005: adjustments and solidification of the financial system2006-2008(GFC): further developments in the financial systemaccording to 2001 WTO accession2008-Present: drive for financial liberalization
Condensed Form of Financial Market DevelopmentStartup of a Financial Market in Acceleration: 4 Major Banksand the PBOC, Commercial Banks and StockExchangesFinancial Reforms after the AFC call for more Financial Reforms:NPLsFinancial Liberalization amidst Contest with Advanced Economies:expansion of channels, issue of internationaltransactions remains, RMB internationalization,SDR, SWFs
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 19 / 20
III. Comparative Cases of EMEs: South Korea and China China’s Financial Reforms, 1978-2012
China’s Post-Global Financial Crisis
China’s 5 Stages of Financial Reform1978-1984: establishment of institutional means1985-1996: opportunities of changes in the financial system1997-2005: adjustments and solidification of the financial system2006-2008(GFC): further developments in the financial systemaccording to 2001 WTO accession2008-Present: drive for financial liberalization
Condensed Form of Financial Market DevelopmentStartup of a Financial Market in Acceleration: 4 Major Banksand the PBOC, Commercial Banks and StockExchangesFinancial Reforms after the AFC call for more Financial Reforms:NPLsFinancial Liberalization amidst Contest with Advanced Economies:expansion of channels, issue of internationaltransactions remains, RMB internationalization,SDR, SWFs
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 19 / 20
III. Comparative Cases of EMEs: South Korea and China China’s Financial Reforms, 1978-2012
China’s Post-Global Financial Crisis
China’s 5 Stages of Financial Reform1978-1984: establishment of institutional means1985-1996: opportunities of changes in the financial system1997-2005: adjustments and solidification of the financial system2006-2008(GFC): further developments in the financial systemaccording to 2001 WTO accession2008-Present: drive for financial liberalization
Condensed Form of Financial Market DevelopmentStartup of a Financial Market in Acceleration: 4 Major Banksand the PBOC, Commercial Banks and StockExchangesFinancial Reforms after the AFC call for more Financial Reforms:NPLsFinancial Liberalization amidst Contest with Advanced Economies:expansion of channels, issue of internationaltransactions remains, RMB internationalization,SDR, SWFs
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 19 / 20
Summary and Policy Recommendations
Summary and Policy Recommendations
A Shift in a Leaderless Economy: Advanced economies andEMEs must work towards plausible agenda together in the G20platform.Capital Controls and Regulation of Competitive Devaluation:Speculative behavior and currency wars must be avoided.Regulations and Surveillance: Strengthened Roles and Reformsof Key Economic International Institutions are needed.
Outlook for Further ResearchEvaluation of Effectiveness of Capital Controls (ongoing)The Current Hurdles of China’s Financial Reform
June Park (Boston University) Echoes of the AFC in Reverse 2012 GEM PhD School 20 / 20