Reforming International Financial Safety Nets

(ADB, IMF and BSP)

05 May 2012 (2:00 pm-3:30 pm, BDO Hall)

Objectives

The 2008 global liquidity crunch momentum calls for reform. The key question to be explored in the seminar is: Does the international financial system need to be reorganized to guarantee adequate international liquidity, and if so how?

Challenges

Calls for a reform of the international financial safety system have become increasingly louder since the 1997–98 Asian financial crisis. In recent years, regional financing mechanisms of diverse scope have emerged and deepened, such as the Chiang Mai Initiative Multilateralization (CMIM) and the European Financial Stability Mechanism and Facility. However, several informal, ad-hoc swap agreements between central banks – with the U.S. Federal Reserve typically being one of the counterparties – were also signed particularly in the fall of 2008.

The seminar will explore four core issues:

  1. Assessment of the current system. The international financial safety net consists of formal and informal mechanisms ranging from national reserve accumulation, bilateral and multilateral ad-hoc swap agreements, regional financing arrangements, to new IMF liquidity facilities. What mechanisms are in place? What historical roles have they played?
  2. Reform of the current system. The G20 leaders have agreed to reform the current system. What suggestions are debated? What role will regional financing arrangements play? Is there room to entertain a dual system of regional and global arrangements? Under what conditions would regional arrangements take precedent over global arrangements?
  3. Support of formal arrangements. Any formal arrangement requires the (international or regional) lending facility to have access to resources of central banks. Which central banks can play this role at various regional levels or even globally? What to do if no strong regional player can be identifies? Will there be room and need for informal, ad-hoc financing agreements?
  4. Impact on the global economy. Reforming the international financial safety net will foster progress on important global macroeconomic issues. How will a reform affect exchange rate policy and the volatility of international capital flows?

Speakers

Haruhiko Kuroda
President, ADB

Delphine D'Amarzit
Director General for International Financial Affairs, Development and Trade, Head of French Delegation

Changyong Rhee
Chief Economist, ADB

Naoyuki Shinohara
Deputy Managing Director, IMF

Anoop Singh
Director of the Asia and Pacific Department, IMF

Amando M. Tetangco, Jr.
Governor, Bangko Sentral ng Pilipinas

Moderator: Nick Gowing
International Journalist and Broadcaster