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Can China still Learn from the European Financial Model? – Discussion Paper Presented at the SNEE Conference in Mölle May 28, 2009

Postat den 29th maj, 2009, 18:55 av hubert

Summary

One main result of this paper is obvious: The costs for failures in deregulation policy can be very high. A number of negative European examples confirm this statement. However, marketization /deregulation are not negative steps per se. On the contrary, an emerging economy can benefit a lot from prudent deregulation, leading to, for example, a better allocation of resources and increased monetary policy efficiency. These developments should be accompanied by further institutional improvements, the important issue of (improved) transparency included. Of course, sequencing is an issue that really should not be underestimated. Gradual but decisive marketization should remain a top priority. In all these respects, Europe as a whole and Euroland can give positive guidelines to China – but also hints on how mistakes and shortcomings can be avoided.

Further conclusions from this paper can be summarized as follows (without ranking), giving a substantial degree of inspiration and ideas from the European financial system – and also warnings.

  • Historically, financial crises can be mostly blamed on excessive liquidity and credits.
  • Historical experience should not be overlooked in marketization processes.
  • Institutional improvements are a necessary precondition for successful financial marketization.
  • Financial marketization requires a deepening of psychological and social research.
  • The interaction between finance and macroeconomics is becoming increasingly important.
  • Chinese banks should give private companies much more priority – and so should the stock exchange.
  • Chinese banks should create more attractive alternatives for household savings.
  • Improving the institutional conditions on Chinese capital markets remains crucial; the shortcomings on the stock and bond market are still considerable despite visible progress.
  • There is both a global and a Chinese way of marketization.
  • Capital account deregulation should remain gradual, and sequencing should follow Chinese priorities.

 

The complete document 

Det här inlägget postades den maj 29th, 2009, 18:55 och fylls under Uncategorized

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