New challenges for Asian financial integration

Abstract

This chapter reviews some of the early lessons that Asia can take from the crisis. Don Hanna provides a comprehensive account of the policies that have been implemented and the global response to the financial crisis. The crisis further elevated policy challenges that had already been escalating, the most important of which were global imbalances, financial sector reform, international economic governance and reform of global institutions. A medium-term priority in financial integration for the region is exchange-rate cooperation, but coordination of macro-economic policy and a focus on domestic reforms and developments are needed to get there. Although these are domestic reforms at heart, there are useful experiences that can benefit some countries that are trying to implement difficult reforms. The most successful example in the region is China, which used external pressure to liberalize its domestic financial system through the World Trade Organization (WTO) accession agreements.