Asia-Pacific Perspectives on the Financial Crisis 2007-2010

Abstract

We consider recent events in financial markets and the subsequent responses by monetary and fiscal authorities, which are impressive for their scale, innovation and flexibility in the face of sharply deteriorating circumstances. Internationally, the economic malaise has brought perverse responses not least being the apparent quest for higher capital adequacy requirements than was thought necessary before the downturn. Immediately this places the need for yet more comprehensive steps to relieve the burden of impaired assets on operating banks if those banks are to contribute additional funding to the real sectors of the global economy. The uniqueness of the responses by authorities in the Asia-Pacific region are highlighted as are the outcomes, which depart significantly from those experienced during the 1997-1998 Asian Crisis. Other features impeding recovery cannot be dealt with immediately. Amongst these the most important is the valuation procedures associated with accounting rules.

Keywords: financial crisis, Asia-Pacific region, economic policy, international banking and bond markets