Hong Kong Monetary Authority and Bank for International Settlements Joint Conference on Asia-Pacific Economies

The Resilience of the Regional Economies in a Turbulent Global Environment

20 October 2016 (Thursday) - 21 October 2016 (Friday)

Auditorium, 56/F, Two International Finance Centre, 8 Finance Street, Central


Day 1, 20 October 2016

8:30-9:00 Welcome Coffee

9:00-9:10 Welcome Remarks by Eddie Yue (Hong Kong Monetary Authority)

9:10-10:00 Keynote Speech by Changyong Rhee (International Monetary Fund)
Session 1 Financial imbalances in Asia: How worried should we be?

Compared to the 1990s and many other EMEs, most Asian economies have stronger economic fundamentals and the macroprudential policy measures put in place in recent years should act as a buffer against future shocks. But financial imbalances in the region built up over the past few years remain a source of vulnerability. In particular, corporate credit has been growing very rapidly over the past few years, while household debt in some parts of the region remains elevated. The significant amount of US dollar denominated liabilities in the region also increases the risk that a weakening of regional currencies may put pressures on the repayment ability of borrowers.

• To what extent do these domestic vulnerabilities pose a challenge to the region’s financial stability?
• How well could the region withstand further currency depreciation and sharper capital outflows?
10:00 - 11:15 Chair: Hyun Song Shin (Bank for International Settlements)

Kazumasa Iwata (Japan Center for Economic Research)
Woon Gyu Choi (International Monetary Fund)
Thorsten Beck (Cass Business School)
Moritz Schularick (University of Bonn)

Roundtable Discussion
11:15-11:45 Coffee Break

Session 2 Capital flows: Are we going to see an eventual reversal of capital flows from the region? How is this going to play out?

Depreciation pressures on Asian currencies intensified early this year along with the global financial market turbulence. In fact, most regional currencies have been weakening against the USD already since mid-2014, well before the US interest rate liftoff. Market sentiment on the EMEs including those in the region deteriorated in early 2016. However, so far only less than 20% of the US$1.7 trillion cumulative capital inflows to emerging Asian economies since 2009 have been unwound.

• Given the unprecedented capital inflows accumulated over recent years, what is the scope for further capital outflows and downward pressure on currencies?
• What are the potential external shocks that could trigger more abrupt capital outflows from the region? Would this result in a disruptive unwinding of financial imbalances in the region?
• How concerned should Asian economies be about the depreciation of their currencies? How important is exchange rate stability in monetary policy making in the region?
11:45-13:00 Chair: Yoga Affandi (Bank Indonesia)

Paul Tucker (Harvard Kennedy School)
Jaturong Jantarangs (Bank of Thailand)
Pierre-Olivier Gourinchas (University of California, Berkeley)

Roundtable Discussion
13:00-14:30 Luncheon Speech (By Invitation)
“Exchange Rate Behavior with Negative Nominal Interest Rates: Some Early Observations”

Andrew K. Rose (University of California, Berkeley)

Session 3 China: Where are the pressure points?

There have been recent concerns over China’s growth prospect, including risks related to corporate leverage, the property market, banks’ asset quality, shadow banking activities, local government financing, the constraints of monetary and fiscal policies to support growth and the pace of structural reforms on SoEs, especially in the overcapacity sector.

• What are the underlying vulnerabilities in China and what are the implications for China's growth prospect?
• What are the pressure points in China in terms of financial stability?
14:30-15:45 Chair: Patrick D’Arcy (Reserve Bank of Australia)

Yiping Huang (Peking University)
Tao Wang (UBS)
Jun Ma (The People’s Bank of China)

Roundtable Discussion
15:45-16:15 Coffee Break

Session 4 Spillover of China’s slowdown to the rest of the region: What are the channels?

Given the size of China’s economy and its increasing integration with the global economy and in particular with the rest of the region, the performance of China’s economy would certainly affect those around it. While the direct trade linkages between China and the rest of the region has grown rapidly over the past years, China’s impact on the volatility of global and regional financial markets has also appeared to have increased.

• What are the direct and indirect channels of spillover from China to other Asian economies?
• What is the impact of RMB depreciation on the region’s currencies and how will it affect economic and financial stability in the region?
16:15-17:30 Chair: Sukhdave Singh (Bank Negara Malaysia)

Min Chang (Bank of Korea)
Don Hanna (Guard Capital Management)
Haibin Zhu (JP Morgan)

Roundtable Discussion
18:00-20:00 Conference Dinner (By Invitation)

Day 2, 21 October 2016

8:30-9:00 Welcome Coffee

Session 5 Is Asia losing its growth momentum? Implications and prospects for potential growth

Many Asian economies have been seeing a slowdown in growth since 2013. Export growth in most regional economies has remained lacklustre despite the stronger recovery of the US economy. While the dependence of the regional economies on China has been increasing rapidly over the past years, China’s economy is now undergoing structural transformation – shifting from investment-driven to consumption-driven growth, and with China’s trade moving up the value chain. These changes in trade pattern would likely have significant implications for the Asian economies.

• To what extent is the growth slowdown cyclical or structural? Is slowing growth but tight labour market in most Asian economies a sign of declining potential growth? Has productivity growth in regional economies slowed in recent years?
• What would changing economic and trade structure in China mean for the rest of the regional economies?
• How far have policymakers committed to structural reforms to boost potential growth in the medium term? What is the way forward?
9:00-10:15 Chair: Lillian Cheung (Hong Kong Monetary Authority)

Junkyu Lee (Asian Development Bank)
Michael Spencer (Deutsche Bank)
Robert Subbaraman (Nomura Singapore Limited)

Roundtable Discussion
10:15-10:45 Coffee Break

Session 6 Panel discussion: Way Forward

Chair: Eddie Yue (Hong Kong Monetary Authority)

Sukhdave Singh (Bank Negara Malaysia)
Diwa C. Guinigundo (Bangko Sentral ng Pilipinas)
Jacqueline Loh (Monetary Authority of Singapore)
Bernard Hodgetts (Reserve Bank of New Zealand)

Roundtable Discussion

- End of Conference -

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