Authors: Hoe Ee Khor and Kim Song Tan, Singapore

The recent financial crisis has highlighted the need for fundamental reforms in the global financial system to make it more robust and resilient to shocks. Although the crisis resulted in a global recession and a sharp decline in global trade, its biggest impact was felt in Europe and the US, both of which experienced severe economic downturns and near collapse in their financial systems. Asian economies, on the other hand, were affected largely through the trade channel. Their financial systems have remained relatively unscathed. They have also been able to recover from the crisis much more rapidly than the West.

This difference helps to explain the muted response from Asia to the various proposals for financial reforms that have been put forward  for fixing the international financial system so far. Read more…