Why Complementarity Matters for Stability—Hong Kong SAR and Singapore as Asian Financial Centers

By Vanessa Le Lesle, Franziska L Ohnsorge, Minsuk Kim, Srikant Seshadri

July 8, 2014

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Vanessa Le Lesle, Franziska L Ohnsorge, Minsuk Kim, and Srikant Seshadri. Why Complementarity Matters for Stability—Hong Kong SAR and Singapore as Asian Financial Centers, (USA: International Monetary Fund, 2014) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

There is much speculation regarding a “race for dominance” among financial centers in Asia, arising from the anticipated financial opening up of China. This frame of reference is, to an extent, a predilection that results from a traditional understanding of financial centers as possessing historical, geographic, and scale economy advantages. This paper, however, suggests that there is an alternative prism through which the evolution of financial centers in Asia needs to be viewed. It underscores the importance of “complementarity” rather than “dominance” to better serve regional and global financial stability. We posit that such complementarity is vital, through network analysis of the roles of Hong Kong SAR and Singapore as the current leading financial centers in the region. This analysis suggests that a competition for dominance can result in de-stabilizing levels of interconnectivity that render the global “network” as a whole more susceptible to rapid propagation of shocks. We then examine the regulatory and policy challenges that may be encountered in furthering such complementary coexistence.

Subject: Banking, Competition, Financial institutions, Financial markets, Financial services, Foreign banks, Securities markets, Stock markets

Keywords: Asia and Pacific, Attractiveness of Hong Kong SAR, Case of Hong Kong SAR, Coexistence of Hong Kong SAR, Competition, Equivalent to the RTGS, Financial crisis, Financial institutions and services, Financial market, Foreign banks, Global, Government policy and regulation, Hedge fund, Hong Kong FSA, Hong Kong SAR, ICBC Singapore, Networks, Securities markets, Singapore in the context, Singapore MAS, Singapore's bank, Singapore's interconnectedness, Singapore's position, Southeast Asia, Stock markets, WP

Publication Details

Pages:

46
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2014/119
Stock No:

WPIEA2014119
ISBN:

9781498334464
ISSN:

1018-5941

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