The People’s Bank of China: Monetary Policy in a Time of Transition


by iMFdirect

Today at the IMF, the Governor of the People’s Bank of China, Zhou Xiaochuan, gave the Michel Camdessus Central Banking Lecture in Washington, D.C.

With China’s economy undergoing a transition, Governor Zhou spoke about managing monetary policy with multiple objectives, and the independence of central banks.

“For central banks with a single objective, it is relatively easy to be independent. However, if a central bank has multiple objectives, it may be harder to be immune from the political reality.”

Zhou also discussed the role of central banks in economies undergoing a transition to a market economy.

“If central banks do not promote financial reforms or development of financial markets, there would be no healthy financial institutions or market mechanisms, let alone smooth transmission of monetary policy. Furthermore, like other emerging market economies, transition economies have a low level of development and hoped to make up for the ‘lost decades’.”

You can watch Governor Zhou’s speech and his discussion with IMF Managing Director Christine Lagarde.

PBOC pic

Back to Asia


Christine LagardeBy Christine Lagarde

In a couple of days, I will embark upon a trip to Asia. Every time I visit Asia, I can feel that dynamism and intensity are in the air. It feels like moving forward in time. Hardly surprising as under current trends, developing Asia alone will account for half of global GDP by 2050. Back to Asia really means back to the future.

This time, I will visit three countries—Cambodia, Korea, and Myanmar. These countries represent three different chapters of the great Asian story, each in their own unique way.

Korea is a country that has propelled itself from very low income levels to one of the world’s richest economies in an astoundingly short period of time. It has a well-deserved reputation for innovation, technological brilliance and hard work. I am convinced it can stay at the leading edge, especially by making labor markets more inclusive—including for women—and making the services sector more dynamic and productive.

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The Art of Shifting Gear


By Anoop Singh

If you needed further evidence about the fallacy of Asia’s economy “decoupling” from that of the developed world, then this month’s Asia and Pacific Regional Economic Outlook would be a good place to look.

The findings in this new report,  just released in the Malaysian capital, Kuala Lumpur, illustrate how Asia’s economic fate remains heavily dependent on events far beyond its immediate borders.

Consider two possible future scenarios to illustrate this ongoing interconnectedness: if global prospects continue to brighten following recent, concerted policy actions in the euro area and, if there are further indications of recovery in the United States, this will all augur well for trade-dependent Asia.   Against this backdrop, the region could enjoy a boost in demand, fresh capital inflows and even a revival of overheating pressures.

But,  were the financial turmoil in the euro area to escalate and spread globally, this would likely result in a sharp fall in demand for Asia’s exports by advanced economies and a possible retrenchment of credit by stressed foreign banks, all of which would be a severe blow to Asia.

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