2016年-PIIE彼得森国际经济研究所_Asian_and_European_Financial_Crises_Compared_57页_323kb

Summary of "Asian and European Financial Crises Compared" by Edwin M. Truman

Core Content

This paper compares the origins, evolution, and lessons from the Asian financial crises of the late 1990s with the European financial crises that emerged during and after the global financial crisis of 2008. Truman argues that while both sets of crises share common characteristics, they differ in key aspects, particularly in the nature of financial support, the severity of reform programs, and the global economic impact.

Main Points

Origins of the Crises

• Credit Booms: Both regions experienced significant credit booms before the crises, which were unsustainable and led to financial instability.
• Similarities: The crises in Asia and Europe were driven by similar vulnerabilities, including macroeconomic imbalances, risky financing of deficits, policy credibility issues, fixed exchange rates, microeconomic distortions, political shocks, and external shocks.
• Differences:
  • Exchange Rate Regimes: Asian countries used fixed or semi-fixed exchange rates, which contributed to currency and maturity mismatches. European countries, particularly those in the euro area, had no independent currencies, making exchange rate adjustments impossible.
  • Breadth of Crises: Asian crises were more widespread across multiple countries, while European crises were more concentrated in specific nations, especially those in the euro area.
  • Persistence: European crises have been more persistent and complex, involving both sovereign and banking sectors.
  • Role of Private and Public Sectors: In Asia, the private sector was heavily involved in foreign borrowing, while in Europe, both private and public sectors relied on short-term financing, leading to a "doom loop" between banks and governments.
  • Preparedness: Asian countries were generally less prepared for the crises, while European countries, particularly those in the euro area, had more institutional frameworks but were still vulnerable due to lack of policy coordination.

Evolution of the Crises

• Financial Support: European crisis countries received more external financial support, but their crises involved solvency issues, whereas Asian crises were more liquidity-driven.
• Reform Programs: European reform programs were less demanding and rigorous compared to those in Asia, which may have contributed to the larger global impact of European crises.
• IMF Role: The IMF was more involved in supporting European countries, but its role was limited to monitoring rather than imposing strict conditionality. The paper argues that the IMF should treat monetary unions like the euro area as a single entity rather than individual countries.

Key Information

Countries Analyzed

• Asia: Indonesia, Republic of Korea, Malaysia, Philippines, Thailand
• Europe: Cyprus, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Portugal, Spain, Romania

Crisis Phases in Europe

1. First Phase (2008): Linked to the global financial crisis, involving Iceland, Hungary, Latvia, and Romania.
2. Second Phase (2009 onwards): Focused on euro area countries, starting with Greece and continuing with Ireland, Portugal, Cyprus, and Spain.

Crisis Vulnerabilities (Roubini and Setser Framework)

1. Macroeconomic Imbalances: Asian countries had significant current account deficits, while European countries had larger fiscal imbalances.
2. Risky Financing: Asian countries relied heavily on short-term foreign currency debt; European countries faced both domestic and foreign bank financing, leading to the "doom loop."
3. Policy Credibility: Governments in both regions faced doubts about their ability to manage crises, but European countries had more constraints due to EU membership and the euro.
4. Fixed Exchange Rates: Asian countries had fixed or semi-fixed exchange rates, which contributed to currency mismatches. European countries had no such flexibility.
5. Microeconomic Distortions: Asian crises were marked by implicit government guarantees, poor corporate governance, and preference for short-term debt. European countries had issues with transparency, accountability, and fragmented financial systems.
6. Political Shocks: Political instability and uncertainty played a significant role in both regions, though more prominently in Europe.
7. External Shocks: The global financial crisis was a major external shock for Europe, while Asia faced common shocks such as trade linkages and contagion effects.

Lasting Lessons

1. History Repeats: Financial crises are likely to recur, and the focus should be on managing their impact rather than preventing them.
2. Global Stake in Crisis Management: Countries not directly affected by a crisis still have a stake in its management and prevention.
3. IMF and Monetary Unions: The IMF should treat monetary unions like the euro area as a single entity, applying policy conditionality to all members, not just individual countries.

Conclusion

Despite differences in the nature of financial support and the structure of exchange rate regimes, the Asian and European financial crises were remarkably similar in their origins and vulnerabilities. The paper emphasizes the need for improved policy coordination, stronger institutional frameworks, and more rigorous reform programs to mitigate the global impact of future financial crises.