After the Great Asian Slump: Towards a Coherent Approach to Global Capital Flows
Abstract• The unprecedented withdrawal of foreign private capital from Asia, more than 10 per cent of GDP in the crisis countries, confronts them with a transfer problem. Creditor governments should induce their home banks into financial rescue operations to reduce moral hazard in private-sector lending, and to encourage Asia’s recovery. • The resolution of Asia’s domestic debt overhang must be the overriding policy concern for Asia’s governments; paying the inevitable fiscal cost in Asia’s restructuring process requires tax-base broadening, supported by easy monetary policy. • Progress towards a less crisis-prone international financial system will hinge on how to correct the excessive risk taking by banks. Regulatory distortions through the Basle Accord which bias bank lending towards the short term should be corrected. • Developing countries should strengthen bank and non-bank balance sheets and raise the quality of inflows; Chile-type regulatory measures, however, will only be effective in an appropriate policy context.
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Bibliographic InfoPaper provided by OECD Publishing in its series OECD Development Centre Policy Briefs with number 16.
Date of creation: 16 Jan 1999
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Capital Market Access as IDA Eligibility Criterion â Worthless and Dangerous
by Shifting Wealth in ShiftingWealth on 2014-04-09 10:45:00
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