The Evolving Multilayered Global Financial Safety Net: The Case of the Association of Southeast Asian Nations+3 Regional Financial Safety Net and the International Monetary Fund
Rana, Pradumna B. | May 2017
Abstract
This paper argues that in the aftermath of the global economic crisis, the centralized international monetary architecture or the global financial safety net (GFSN) set up at the Bretton Woods conference is evolving towards a more decentralized multilayered safety net comprising (i) the G20 at the apex as an overarching institution, (ii) multilateral financial safety nets (MFSNs) established under the auspices of the International Monetary Fund (IMF), (iii) bilateral financial safety nets (BFSNs) among central banks, (iv) regional financial safety nets (RFSNs) established in various regions of the world, and (v) national financial safety nets (NFSNs) or reserve accumulation by individual countries. The most significant factor explaining this evolution is financial globalization and the increased incidence of capital account crisis. As in many other regions of the world, Asia has established the ASEAN+3 RFSN, comprising the Chiang Mai Initiative Multilateralization (CMIM) and ASEAN+3 Macroeconomic Research Office (AMRO), for crisis prevention and management. The ASEAN+3 RFSN seeks to complement the IMF. However, because of its ad hoc nature and the relatively small size and cumbersome disbursement procedures, it is unlikely that this facility will be utilized when the next financial crisis hits the region. Based on Europe’s experience with RFSN and IMF cooperation, the paper makes the case for a more structured form of cooperation between the ASEAN+3 RFSN and the IMF. Our proposal, together with the recent upgradation of AMRO to an international organization, could greatly enhance the effectiveness of the ASEAN+3 RFSN.
Citation
Rana, Pradumna B.. 2017. The Evolving Multilayered Global Financial Safety Net: The Case of the Association of Southeast Asian Nations+3 Regional Financial Safety Net and the International Monetary Fund. © Asian Development Bank Institute. http://hdl.handle.net/11540/7171.Keywords
International Financial Market
Multilateral Financial Institutions
Economic Recession
Market
Crisis
Economic indicators
Growth models
Gross domestic product
Macroeconomics
Economic forecast
Financial Stability
Financial Management System
Financial Restructuring
Capital Market Development
Market Development
Economics
Erosion
International Economics
Macroeconomic
Macroeconomic Analysis
Performance Evaluation
Impact Evaluation
Foreign and Domestic Financing
Business recessions
Multilateral development banks
Regulatory reform
Capital
Exports
Economic development projects
Economic policy
Economic forecasting
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http://hdl.handle.net/11540/7171Metadata
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