mark johnson- financial systems in asia pacific

Financial Systems in Asia Pacific

Towards Integration

9 May 2013

AICD Singapore ConferenceShangri-La Hotel, Singapore

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Dr Philip Lowe: China Australian Financial relationship

• As trade linkages increase, firms require an increasing array of financial services

• Financial architecture… is incrementally, but inexorably, being put in place

• Still a lot to be done …

Source: Address to Australian Chamber of Commerce in Shanghai 24 April 2013

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Governor Glenn Stevens: Asia Pacific Financial Markets

• Growth in … capital markets is surely likely

• Real wealth (and human capital) growing

• “Financial deepening” has a long way to go

Task … not so much promote growth … as to shape growth

What kind of financial system do we want to see in the region?

Source: Remarks to Asia-Pacific Financial Market Development Symposium. Sydney 10 April 2013

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Financial systems can be a development agent:

• Grow real economies in region

• Benefit people of region and business – a virtuous circle

A regional voice is desirable

AICD and business should demand this from policy makers and regulators

Some Propositions

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Asian Financial Crisis97-98

Global Financial Crisis2008-11?

EuroZone Financial Crisis2012….??

What have we got at the moment?

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“Global Imbalances” 1

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Global imbalances 2

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Governor Stevens:“Why not deploy the regions own

savings at home, for higher returns”

Big Question

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A “Well Developed” Financial System

Maturity transformation

Intertemporal adjustment

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APEC Economies – Financial Systems

Well developed, not balancedUnder developed

Well developed, balanced

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For what purposes?

Financial InclusionOne billion without bank accountsSME financeMeet the needs of people and business

RupiahDong $$

$$

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For what purposes?

Connect economies and institutionsRMB and Rupee internationalisationCapital marketsFinance trade and investments

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For what purposes?

Transformation Institutions to marshal long term savings• Health• Welfare and pensions• Infrastructure

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What is the “Financial Architecture”? 1

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“North Atlantic” structures

“North Atlantic” priorities

• Regulation

• Fiscal constraints

What is the “Financial Architecture”? 2

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ASEAN• ASEAN + 3• East Asia Summit

What Regional Architecture? 1

• Asian Bond Markets• Chiang Mai

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APEC• Regional Funds Passport• Asia Pacific Financial Forum?

What Regional Architecture? 2

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Business wants financial systems that are:• Sound• Efficient• Integrated

Region has unique challenges

Inaction will stunt growth

Regional voice desirable

A Regional Voice?

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APFF• Business / APEC Finance Ministers• New “financial architecture”• A structure, not a list of issues

ASEAN and APEC• Best models for region

Asia Pacific Financial Forum