Emerging banks: threat of systemic collapse?

Although this is unlikely to precipitate a global banking crisis, it will hit banking profits worldwide. And it will hasten the financial system shake-out in Japan, especially if structural reform in China leads to a collapse of the Hong Kong dollar peg (to which Japan’s banks are vulnerable).

Other OECD economies will be affected too. Trade balances will weaken dramatically, as emerging economies have accounted for close to 40% of the developed world’s merchandise export growth since 1989.