With the 1997- 1998 Asian currency and economic crisis China changed its policy, aiming at the promotion of East Asian regional cooperation, yet now ten years later, based on a new global economic crisis, they have raised regional cooperation promotion policy up another stage to a high level.
In the presentation, Watanabe introduced the future efforts of JBIC as"Path to 2020", after the presentation of transition of JBIC's loan, investment and guarantee commitment amounts and the explanation of JBIC's correspondence at the time of the Asian currency crisis and the global financial crisis.
For example, in 1997 there was the Asian currency crisis, in 1998 the Russian crisis and the crisis triggered by the failure of Long-Term Capital Management(LTCM), a U.S. hedge fund, and in 2000-2001 the bursting of the global IT bubble.
Since the Asian currency crisis, Asian countries have been striving to create diversity in the source of funds, including bonds, instead of relying heavily on banks. I believe that the growth of Islamic finance will also contribute to resolving these problems.
The Asian currency crisis highlighted the structural vulnerabilities in the region's economies: first, there was the double-mismatch of currency and maturity in the region's financial sector, and second, corporate finance remained highly dependent on banks.
However, the Asian currency and financial crisis and the subsequent turmoil in the currency and financial markets of developing countries shows that international finance has become an equally important, or perhaps more important, avenue of propagation.
On the other side of the picture, as evident in the case of the Asian currency crisis 20 years ago or the global financial crisis that erupted 10 years ago, negative shocks are more likely to transcend national borders.
During that period, Japan's economy was caught in various negative shocks: the nonperforming loan problem and the Asian currency crisis in the latter half of the 1990s, and a burst of an IT bubble in the United States, the Lehman crisis, and the Great East Japan Earthquake after the turn of the 2000s.
The scale of external debt(% of GNI) in Thailand was 75% in 1997; meanwhile, the external debt in India and Brazil was 18% and 17% respectively in 2011, and the possibility of a recurrence of the Asian Currency Crisis is low.
It failed to fix its banks and stopped its early fiscal stimulus before recovery had taken hold, leaving the economy all too vulnerable to outside shocks, including the Asian currency crisis and the dot-com collapse in 2001.
Over the 40 years of my career in finance, I have witnessed a number of financial crises and challenges- the inflation spikes of the 1970s and early 1980s, the Asian currency crisis in 1997, the dot-com bubble, and the global financial crisis.
There was a strong market concern about the possibility of a further decline in the yen against the background of(1) anxiety about a depreciation of Asian currencies in general triggered by recent rumors of a devaluation of the Chinese yuan and of an abandonment of the Hong Kong dollar's peg to the U. S.
According to a BIS survey as of April 2010, global foreign exchange transactions increased by 20 percent compared with that of three years ago. Among them, the share of Asian currencies in foreign exchange transactions is only less than 4 percent Slide 19.
Asian currencies, bonds, and stocks, in certain phases, were sold intermittently against the backdrop of investors' reduced risk appetite, and Asian economies were depressed temporarily. Despite the magnitude of the shock, however, the situation never led to a recurrence of the Asian currency crisis: Asia quickly turned its economies around and stabilized its markets.
The bond issue this time marks the first of its kind that utilizes the scheme inaugurated by the Ministry of Economy, Trade and Industry. The Ministry has been promoting the development of bond markets in Asian countries, an agenda discussed at the ASEAN Summit in August 2003, and created a scheme that facilitates Japanese-affiliated companies to issue bonds denominated in Asian currencies.
Just before the introduction of the euro, when a search for a new international monetary system was just starting, the Asian monetary crisis suddenly erupted with the depreciation of the Thai baht in July 1997. The crisis added new steam to the debate over a new international monetary system because one of the reasons for the Asian crisis was the fact that the Asian monetary system was too closely linked to the US dollar.
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