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

47 Pages Posted: 1 Aug 2014

See all articles by Vanessa Le Leslé

Vanessa Le Leslé

International Monetary Fund (IMF)

Franziska Ohnsorge

International Monetary Fund (IMF)

Srikant Seshadri

International Monetary Fund (IMF)

Minsuk Kim

International Monetary Fund (IMF)

Date Written: July 2014

Abstract

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.

Keywords: Offshore financial centers, Hong Kong SAR, Singapore, Asia, Financial sector, Banks, Regional integration, Interconnectedness, Networks, financial institutions and services, government policy and regulation, bond, financial stability, bond markets, financial institutions, hedge, financial market, international bond, hedge funds, bonds, financial system, financial services, bond issuances, asian bond markets, bond market, international bond markets, financial systems, equity markets, financial regulation, derivative, equity market, bond issuance, stock exchange, hedge fund, bond market development, stock exchanges, derivative market, sovereign bond, derivatives transactions, index futures, ex

JEL Classification: C40, G20, G28

Suggested Citation

Le Leslé, Vanessa and Ohnsorge, Franziska and Seshadri, Srikant and Kim, Minsuk, Why Complementarity Matters for Stability — Hong Kong SAR as Asian Financial Centers (July 2014). IMF Working Paper No. 14/119. Available at SSRN: https://ssrn.com/abstract=2475015

Vanessa Le Leslé (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Franziska Ohnsorge

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Srikant Seshadri

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Minsuk Kim

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
32
Abstract Views
390
PlumX Metrics