The Basel Process and regional harmonisation in Asia

Abstract

This paper examines the move toward greater harmonisation in banking supervision in Asia. Central banks in the Asia Pacific region have strengthened their cooperation through various channels. Equally important, international institutions including the Bank for International Settlements have responded to such trends by becoming more involved in regional forums and better accommodating the needs of regional economies. It discusses globalisation and regionalisation and concludes that they are not mutually exclusive concepts; instead they are complementary, as society can exploit the opportunities brought by the free economy while at the same time instilling prudence in the economy and the financial system. The so-called Basel Process is a key element of the global financial system. The influence of market participants has rendered the Basel Process more transparent and market oriented. On the other hand, rapid financial innovation has necessitated the cooperation of various Basel-based committees under the umbrella of the Financial Stability Forum. The paper points out that regional harmonisation can be achieved through the Basel Process and concludes that cooperation should be pursued in both crisis management and crisis prevention, emphasizing role of central banks in the latter. Show more