Regulation puts global banking in peril

Regulation puts global banking in peril

Don’t believe the G20 hype

The battle for Bank Asya

The battle for Bank Asya

Despite political football, the bank is still in the game

Tuesday, September 4, 2012

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Global policymakers in the spotlight

Euromoney, working in conjunction with Euromoney Country Risk, profiles the global policymaking landscape.

In recent years, G7 central banks and finance ministries, with the exception of Canada, have largely grappled with broken credit-transmission channels, while failing to achieve meaningful growth or debt sustainability.

Meanwhile, growth markets, especially in South America and southeast Asia, have dealt with hydra-shaped risks: growth/inflation trade-offs or, during prolonged market rallies, the challenges of destabilizing capital inflows and excessive currency appreciation.

This year, the global monetary easing cycle has intensified, with inflation no longer the overriding concern among emerging market policymakers. The monetary policy calculus has shifted in the wake of the eurozone debt crisis and a domestic slowdown in the investment and consumption cycles in all the key emerging economies.

As a result, monetary-policy timing – as well as decisions and the quality of tools available – have proved crucial to shaping the economic cycle. Fiscal policy, meanwhile, has played a more varied role, given the divergent debt metrics across emerging markets.

By contrast, developed markets have scarcely benefited from the luxury of proactive policymaking while they attempt to firefight the growth crisis with few tools left in the policy arsenal.

At the same time, fears are growing that the US Federal Reserve and the European Central Bank have compromised their independence and are sowing the seeds of a new credit bubble, while the negative sovereign-bank feedback loop intensifies.

Against this backdrop, working in conjunction with Euromoney Country Risk, which has more than 400 economists around the world contributing on sovereign risk on a regular basis, Euromoney profiles some of the most effective policymakers across the world relative to the challenges in their respective markets.

This list incorporate the views of senior bankers and economists, taking into account subjective assessments of political and economic performance, in addition to our propriety sovereign risk data.