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Contributions from
the Column
Media
The world at the abyss
Achieving food and nutrition security
Financial stability and growth in emerging economies
Corporations in global politics
Water – a human right?
11/2005 |
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Financial systems:
Lack of coherence
Jan Joost Teunissen, Mark Teunissen (Ed.):
Financial Stability and Growth in Emerging Economies.
The Role of the Financial Sector,
The Hague: FONDAD 2003, 278 pp.,
¤ 24.50, ISBN 90-74208-21-5
The stability of financial systems in developing countries and emerging markets remains one of the most important topics of the development debate. This collection of articles by authors from the OECD and developing countries is the result of a conference held in Amsterdam and explores the issue.
The book closely scrutinises the specific challenges for the regions of Eastern Europe, Latin America and Asia, as well as the challenges for regulatory authorities and market participants. The individual articles stimulate further discussion. Charles Wyplosz proposes breaking new ground by assigning the responsibility for national revenue and expenditure to independent Fiscal Policy Committees, thus withdrawing them from the influence of politics. Mark Allen of the IMF correctly rejects this notion as technocratic and apolitical.
The issue of a state’s debt sustainability and spending priorities is at the core of political dispute – even more so than monetary policy. These matters are not fit for delegation to a supposedly apolitical panel of experts.
The discussions in the chapter on East Asia are enlightening. Keynesian Heiner Flassbeck comments on a neoclassical essay by Yung Chul Park and Kee Hong Bea, revealing some interesting perspectives.
An article by the former Vice Finance Minister of Japan, Eisuke Sakakibara, sheds some light on the dynamics of monetary cooperation in East Asia, regularly underestimated in Europe, and points out its potential. Sakakibara proposes the creation of an Asian Currency Unit (ACU). He mentions the ongoing effects of the Asian crisis, which have caused disillusionment about the stability of international finance in the countries concerned.
The collection has two major flaws. First, the editors have failed to supply an acceptable definition of what financial stability actually is. Admittedly, the concept is not easy to define – unlike financial instability, which is much more simply explained. It remains confusing, whether the authors primarily want to discuss the stability of the financial sector and the absence of credit crises, or whether financial stability should also encompass the stability of monetary value and exchange rates.
The second flaw is the heterogeneity of the volume. The themes of the four chapters hardly relate to each other. Nonetheless, this book by the Forum on Debt and Development (FONDAD) based in The Hague is a relevant contribution to the debate on a new international financial architecture.
Heribert Dieter
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