As Asia takes a bigger role on the global stage, its financial sector is unlikely to repeat the mistakes of their Western counterparts, according to Simon Tay, Chairman of the Singapore Institute of International Affairs, and Associate Professor at the National University of Singapore’s faculty of law.
“The challenge for Asia is that it is becoming the focus as the key area for growth. Before the global financial crisis, Europe and America were doing relatively well, and was Asia. So there was, in a sense, a tri-polar world. But now, with the Western crisis, so much hope and attention has come to Asia. If you look at where we are today, we are doing better,” Mr. Tay said.
“Looking at the financial sector, the other thing that is always here is that Asian banks are seen as relatively safe: they have avoided the more speculative activities that Western banks have pursued. Having cleaned-up after that Asian financial crisis more than a decade ago, they are thought to be on sounder footing. The question then is about whether they can then continue to grow amidst global uncertainty and still remain safe; growth and safety aren’t always compatible.”
Regarding the internationalisation of China’s currency, the Renminbi, Associate Professor Tay said: “There is all manner of speculation about the RMB becoming a global currency, but it’s being reined in by the Chinese authorities’ desire not to internationalise it and lose control. So we’re looking at the experiments that China is trying with cross-border trade using the RMB, and using offshore financial hubs as centres for internationalisation”.
The full interview was originally featured in Sibos Issues, a publication for the Sibos conference, organised by SWIFT, under the title ‘Keep it simple, Simon says’. Mr. Tay will be speaking at Sibos 2012 in Osaka, Japan between 29 October-1 November 2012.