Back
About RSIS
Introduction
Building the Foundations
Welcome Message
Board of Governors
Staff Profiles
Executive Deputy Chairman’s Office
Dean’s Office
Management
Distinguished Fellows
Faculty and Research
Associate Research Fellows, Senior Analysts and Research Analysts
Visiting Fellows
Adjunct Fellows
Administrative Staff
Honours and Awards for RSIS Staff and Students
RSIS Endowment Fund
Endowed Professorships
Career Opportunities
Getting to RSIS
Research
Research Centres
Centre for Multilateralism Studies (CMS)
Centre for Non-Traditional Security Studies (NTS Centre)
Centre of Excellence for National Security
Institute of Defence and Strategic Studies (IDSS)
International Centre for Political Violence and Terrorism Research (ICPVTR)
Research Programmes
National Security Studies Programme (NSSP)
Social Cohesion Research Programme (SCRP)
Studies in Inter-Religious Relations in Plural Societies (SRP) Programme
Other Research
Future Issues and Technology Cluster
Research@RSIS
Science and Technology Studies Programme (STSP) (2017-2020)
Graduate Education
Graduate Programmes Office
Exchange Partners and Programmes
How to Apply
Financial Assistance
Meet the Admissions Team: Information Sessions and other events
RSIS Alumni
Outreach
Global Networks
About Global Networks
RSIS Alumni
Executive Education
About Executive Education
SRP Executive Programme
Terrorism Analyst Training Course (TATC)
International Programmes
About International Programmes
Asia-Pacific Programme for Senior Military Officers (APPSMO)
Asia-Pacific Programme for Senior National Security Officers (APPSNO)
International Conference on Cohesive Societies (ICCS)
International Strategy Forum-Asia (ISF-Asia)
Publications
RSIS Publications
Annual Reviews
Books
Bulletins and Newsletters
RSIS Commentary Series
Counter Terrorist Trends and Analyses
Commemorative / Event Reports
Future Issues
IDSS Papers
Interreligious Relations
Monographs
NTS Insight
Policy Reports
Working Papers
External Publications
Authored Books
Journal Articles
Edited Books
Chapters in Edited Books
Policy Reports
Working Papers
Op-Eds
Glossary of Abbreviations
Policy-relevant Articles Given RSIS Award
RSIS Publications for the Year
External Publications for the Year
Media
Cohesive Societies
Sustainable Security
Other Resource Pages
News Releases
Speeches
Video/Audio Channel
External Podcasts
Events
Contact Us
S. Rajaratnam School of International Studies Think Tank and Graduate School Ponder The Improbable Since 1966
Nanyang Technological University Nanyang Technological University
  • About RSIS
      IntroductionBuilding the FoundationsWelcome MessageBoard of GovernorsHonours and Awards for RSIS Staff and StudentsRSIS Endowment FundEndowed ProfessorshipsCareer OpportunitiesGetting to RSIS
      Staff ProfilesExecutive Deputy Chairman’s OfficeDean’s OfficeManagementDistinguished FellowsFaculty and ResearchAssociate Research Fellows, Senior Analysts and Research AnalystsVisiting FellowsAdjunct FellowsAdministrative Staff
  • Research
      Research CentresCentre for Multilateralism Studies (CMS)Centre for Non-Traditional Security Studies (NTS Centre)Centre of Excellence for National SecurityInstitute of Defence and Strategic Studies (IDSS)International Centre for Political Violence and Terrorism Research (ICPVTR)
      Research ProgrammesNational Security Studies Programme (NSSP)Social Cohesion Research Programme (SCRP)Studies in Inter-Religious Relations in Plural Societies (SRP) Programme
      Other ResearchFuture Issues and Technology ClusterResearch@RSISScience and Technology Studies Programme (STSP) (2017-2020)
  • Graduate Education
      Graduate Programmes OfficeExchange Partners and ProgrammesHow to ApplyFinancial AssistanceMeet the Admissions Team: Information Sessions and other eventsRSIS Alumni
  • Outreach
      Global NetworksAbout Global NetworksRSIS Alumni
      Executive EducationAbout Executive EducationSRP Executive ProgrammeTerrorism Analyst Training Course (TATC)
      International ProgrammesAbout International ProgrammesAsia-Pacific Programme for Senior Military Officers (APPSMO)Asia-Pacific Programme for Senior National Security Officers (APPSNO)International Conference on Cohesive Societies (ICCS)International Strategy Forum-Asia (ISF-Asia)
  • Publications
      RSIS PublicationsAnnual ReviewsBooksBulletins and NewslettersRSIS Commentary SeriesCounter Terrorist Trends and AnalysesCommemorative / Event ReportsFuture IssuesIDSS PapersInterreligious RelationsMonographsNTS InsightPolicy ReportsWorking Papers
      External PublicationsAuthored BooksJournal ArticlesEdited BooksChapters in Edited BooksPolicy ReportsWorking PapersOp-Eds
      Glossary of AbbreviationsPolicy-relevant Articles Given RSIS AwardRSIS Publications for the YearExternal Publications for the Year
  • Media
      Cohesive SocietiesSustainable SecurityOther Resource PagesNews ReleasesSpeechesVideo/Audio ChannelExternal Podcasts
  • Events
  • Contact Us
    • Connect with Us

      rsis.ntu
      rsis_ntu
      rsisntu
      rsisvideocast
      school/rsis-ntu
      rsis.sg
      rsissg
      RSIS
      RSS
      Subscribe to RSIS Publications
      Subscribe to RSIS Events

      Getting to RSIS

      Nanyang Technological University
      Block S4, Level B3,
      50 Nanyang Avenue,
      Singapore 639798

      Click here for direction to RSIS

      Get in Touch

    Connect
    Search
    • RSIS
    • Publication
    • RSIS Publications
    • CO16160 | The Post-Brexit World: How Should East Asian Finance Cope?
    • Annual Reviews
    • Books
    • Bulletins and Newsletters
    • RSIS Commentary Series
    • Counter Terrorist Trends and Analyses
    • Commemorative / Event Reports
    • Future Issues
    • IDSS Papers
    • Interreligious Relations
    • Monographs
    • NTS Insight
    • Policy Reports
    • Working Papers

    CO16160 | The Post-Brexit World: How Should East Asian Finance Cope?
    Kaewkamol Pitakdumrongkit

    28 June 2016

    download pdf

    Synopsis

    The post-Brexit world is now bracing for the immediate effects on financial markets, including in East Asia. More enhanced macroeconomic policy coordination is needed. Yet, a strong political will is required for successful joint effort.

    Commentary

    AFTER MUCH heated debate, Brexit has become a reality. The United Kingdom has voted in a referendum to leave the European Union (EU). No one knows for sure in the long run how much Brexit will affect the global economy, especially in the realms of international trade, and financial stability and system. Uncertainty is now a certainty.

    Although the actual UK withdrawal does not happen overnight as there will be a two-year transition period to allow for exit negotiations, the effect of Brexit has taken a toll on financial markets around the globe. East Asia has not been spared. Its stock markets plunged. The Nikkei was down 7.92% and KOSPI was off by 3.09%. Hang Seng and Shanghai Composite finished lower at 2.95% and 1.30% respectively.

    East Asian Responses

    The turmoil triggered swift responses by some regional states. The Japanese government convened to discuss how to lessen the impact of Brexit on its financial market. Finance Minister Taro Aso announced that Tokyo was ready to roll out actions to address wild swings. Also, the Bank of Korea held a meeting to figure out ways to tame the local turmoil. According to its Vice Finance Minister Choi Sang-Mok, Seoul “will do its best to minimise any adverse impact of the Brexit outcome on the South Korean economy”.

    The spokesperson of the Monetary Authority of Singapore declared that the entity “will continue to be vigilant and stay in close contact with fellow central banks and regulators, as uncertainty is likely to persist following the referendum outcome”. The last statement demonstrates a good sign reflecting the government’s plan to work together with the others to jointly address a potential financial roller-coaster.

    Policy Coordination to Face Future Uncertainty

    As uncertainty lingers, East Asian nations should further enhance their macroeconomic policy coordination. The benefits of such course of action are clear: Firstly, policy coordination could boost information exchanges between the governments. Such sharing is useful as it improves their ability to evaluate the situations and diagnose problems at stake, and together devise feasible policy actions.

    Given that the East Asian economies are intertwined in the regional production networks, cooperating helps the countries avoid implementing measures that lead to undesirable effects, such as an upward pressure on neighbouring countries’ currencies which can disrupt international trade and investment flows.

    Also, policy coordination can reduce future turmoil. Financial markets are influenced by ideas and perceptions. History teaches us that some rumours trigger herd behaviour such as rapid sell-offs which led to stock market plummet and value loss. By working together, the regional states can jointly prevent rumours from spreading and becoming the “truth” in investors’ minds.

    More regular meetings between East Asian officials should be held because they could signal to the market about the governments’ commitment to collectively address regional financial issues. Moreover, joint press conferences or statements after the meetings should be delivered. Such communication is necessary as it lessens the probability that international investors would misinterpret states’ intentions and actions. It also helps counter baseless rumours, reducing the likelihood of financial panic and chaos.

    East Asia’s Role in Shaping Global Policy

    Moreover, such effort can increase East Asia’s roles in shaping global policy coordination. The regional states have been active participants in several platforms at the global level such as the Group of Twenty (G-20) and Financial Stability Board. Some successful actions and approaches adopted by East Asian nations can be proposed at the global platforms as ways to lessen or avoid market volatility.

    How would regional macroeconomic policy coordination be improved? Among the possible modalities, one pathway that analysts agree is to build upon the existing architectures, namely the ASEAN+3 process. The framework has provided foundations in the areas of reserve sharing/liquidity provision (under the Chiang Mai Initiative Multilateralisation or CMIM), capital market development (as reflected by the Asian Bond Markets Initiative or ABMI), and surveillance mechanisms (such as the ASEAN+3 Macroeconomic Research Office or AMRO).

    Despite these achievements, more work is needed to boost policy coordination which could be done, for example, by creating regional guidelines or blueprints for actions regarding the management of short-term capital flows and undertaking joint inflation targeting. Admittedly, these actions face challenges as they require policy adjustments of the involved stakeholders. As a result, there is a clear need for strong political will to realise successful coordination.

    Governments must convince one another that collective effort will better address financial problems than individual actions which can potentially offset the effect of the other states’ policies. In short, regionalist interests must be seriously taken into account as well.

    How the future of East Asian financial regionalism will unfold is still unclear. With Brexit now a fact, would the regional states use this event as an opportunity to foster more joint policy coordination? Or would they end up undertaking macroeconomic management on their own?

    About the Author

    Kaewkamol Pitakdumrongkit is an Assistant Professor at the Centre for Multilateralism Studies (CMS), S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore.

    Categories: RSIS Commentary Series / Conflict and Stability / Country and Region Studies / International Political Economy / Regionalism and Multilateralism / Europe / South Asia / Global

    Synopsis

    The post-Brexit world is now bracing for the immediate effects on financial markets, including in East Asia. More enhanced macroeconomic policy coordination is needed. Yet, a strong political will is required for successful joint effort.

    Commentary

    AFTER MUCH heated debate, Brexit has become a reality. The United Kingdom has voted in a referendum to leave the European Union (EU). No one knows for sure in the long run how much Brexit will affect the global economy, especially in the realms of international trade, and financial stability and system. Uncertainty is now a certainty.

    Although the actual UK withdrawal does not happen overnight as there will be a two-year transition period to allow for exit negotiations, the effect of Brexit has taken a toll on financial markets around the globe. East Asia has not been spared. Its stock markets plunged. The Nikkei was down 7.92% and KOSPI was off by 3.09%. Hang Seng and Shanghai Composite finished lower at 2.95% and 1.30% respectively.

    East Asian Responses

    The turmoil triggered swift responses by some regional states. The Japanese government convened to discuss how to lessen the impact of Brexit on its financial market. Finance Minister Taro Aso announced that Tokyo was ready to roll out actions to address wild swings. Also, the Bank of Korea held a meeting to figure out ways to tame the local turmoil. According to its Vice Finance Minister Choi Sang-Mok, Seoul “will do its best to minimise any adverse impact of the Brexit outcome on the South Korean economy”.

    The spokesperson of the Monetary Authority of Singapore declared that the entity “will continue to be vigilant and stay in close contact with fellow central banks and regulators, as uncertainty is likely to persist following the referendum outcome”. The last statement demonstrates a good sign reflecting the government’s plan to work together with the others to jointly address a potential financial roller-coaster.

    Policy Coordination to Face Future Uncertainty

    As uncertainty lingers, East Asian nations should further enhance their macroeconomic policy coordination. The benefits of such course of action are clear: Firstly, policy coordination could boost information exchanges between the governments. Such sharing is useful as it improves their ability to evaluate the situations and diagnose problems at stake, and together devise feasible policy actions.

    Given that the East Asian economies are intertwined in the regional production networks, cooperating helps the countries avoid implementing measures that lead to undesirable effects, such as an upward pressure on neighbouring countries’ currencies which can disrupt international trade and investment flows.

    Also, policy coordination can reduce future turmoil. Financial markets are influenced by ideas and perceptions. History teaches us that some rumours trigger herd behaviour such as rapid sell-offs which led to stock market plummet and value loss. By working together, the regional states can jointly prevent rumours from spreading and becoming the “truth” in investors’ minds.

    More regular meetings between East Asian officials should be held because they could signal to the market about the governments’ commitment to collectively address regional financial issues. Moreover, joint press conferences or statements after the meetings should be delivered. Such communication is necessary as it lessens the probability that international investors would misinterpret states’ intentions and actions. It also helps counter baseless rumours, reducing the likelihood of financial panic and chaos.

    East Asia’s Role in Shaping Global Policy

    Moreover, such effort can increase East Asia’s roles in shaping global policy coordination. The regional states have been active participants in several platforms at the global level such as the Group of Twenty (G-20) and Financial Stability Board. Some successful actions and approaches adopted by East Asian nations can be proposed at the global platforms as ways to lessen or avoid market volatility.

    How would regional macroeconomic policy coordination be improved? Among the possible modalities, one pathway that analysts agree is to build upon the existing architectures, namely the ASEAN+3 process. The framework has provided foundations in the areas of reserve sharing/liquidity provision (under the Chiang Mai Initiative Multilateralisation or CMIM), capital market development (as reflected by the Asian Bond Markets Initiative or ABMI), and surveillance mechanisms (such as the ASEAN+3 Macroeconomic Research Office or AMRO).

    Despite these achievements, more work is needed to boost policy coordination which could be done, for example, by creating regional guidelines or blueprints for actions regarding the management of short-term capital flows and undertaking joint inflation targeting. Admittedly, these actions face challenges as they require policy adjustments of the involved stakeholders. As a result, there is a clear need for strong political will to realise successful coordination.

    Governments must convince one another that collective effort will better address financial problems than individual actions which can potentially offset the effect of the other states’ policies. In short, regionalist interests must be seriously taken into account as well.

    How the future of East Asian financial regionalism will unfold is still unclear. With Brexit now a fact, would the regional states use this event as an opportunity to foster more joint policy coordination? Or would they end up undertaking macroeconomic management on their own?

    About the Author

    Kaewkamol Pitakdumrongkit is an Assistant Professor at the Centre for Multilateralism Studies (CMS), S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore.

    Categories: RSIS Commentary Series / Conflict and Stability / Country and Region Studies / International Political Economy / Regionalism and Multilateralism

    Popular Links

    About RSISResearch ProgrammesGraduate EducationPublicationsEventsAdmissionsCareersVideo/Audio ChannelRSIS Intranet

    Connect with Us

    rsis.ntu
    rsis_ntu
    rsisntu
    rsisvideocast
    school/rsis-ntu
    rsis.sg
    rsissg
    RSIS
    RSS
    Subscribe to RSIS Publications
    Subscribe to RSIS Events

    Getting to RSIS

    Nanyang Technological University
    Block S4, Level B3,
    50 Nanyang Avenue,
    Singapore 639798

    Click here for direction to RSIS

    Get in Touch

      Copyright © S. Rajaratnam School of International Studies. All rights reserved.
      Privacy Statement / Terms of Use
      Help us improve

        Rate your experience with this website
        123456
        Not satisfiedVery satisfied
        What did you like?
        0/255 characters
        What can be improved?
        0/255 characters
        Your email
        Please enter a valid email.
        Thank you for your feedback.
        This site uses cookies to offer you a better browsing experience. By continuing, you are agreeing to the use of cookies on your device as described in our privacy policy. Learn more
        OK
        Latest Book
        more info