Author: Shinji Takagi, Osaka University

The unfolding euro crisis makes clear the difficulty of managing a single monetary policy among a group of countries that retain separate fiscal policies and regulatory rules over national banking systems. The lessons for Asia are profound.

In order to help save the euro, in December 2011, European leaders agreed to impose binding limits on national budgets and borrowing, with penalties for those who violate them. Read more…

Author: Shinji Takagi, Osaka University

Financial integration can be defined in several ways. But the only relevant definition, in the context of ongoing policy debate in Asia, is in terms of bilateral financial links analogous to the way trade integration is typically defined.

No other definition would highlight the asymmetry between trade and finance in Asia. Read more…

Author: Shinji Takagi, Osaka University

Reform of the International Monetary Fund has been a constant theme of all G20 summits since November 2008. Although the G20 has yielded some concrete results in coordinating macroeconomic policies and financial regulatory reform, the same thing cannot yet be said about the promised IMF reform.

In view of the role the IMF must play in the post-financial crisis world, the leaders at the first G20 Summit in Washington in November 2008 expressed a commitment to advance reform so as to increase the ‘legitimacy’ and ‘effectiveness’ of the IMF and instructed the finance ministers to review its mandate and governance. Read more…

Author: Shinji Takagi, Osaka University

The G-20 Summit of April 2009 called for a reform of the International Monetary Fund (IMF). Augmenting the IMF’s resources and making its lending more friendly to potential borrowers hit hard by the global economic crisis has been the easy part. More difficult to reform is the governance of the institution, which among others involves a reallocation of voices among the membership and an overhaul of its governance framework. Nevertheless, the Summit committed ‘to implementing the package of IMF quota and voice reforms agreed in April 2008 and call on the IMF to complete the next review of quotas by January 2011’ and agreed to give ‘consultation to greater involvement of the Fund’s Governors in providing strategic direction to the IMF.’

Increasing the voice and representation of new economic powers is important if the IMF is to maintain or restore relevance and legitimacy. In this context, what has been achieved in the 2006 and 2008 quota reforms is disappointing: the weight of the Asia-Pacific region has risen only by about 1.5 per cent, while that of Europe has hardly changed. The G-20 Summit called for an acceleration of the next round of quota reform but, given the nature of the voice reform as a zero-sum game, the pace of reform can only be incremental.

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