Financial and currency crises can lead to major increases in poverty and could threaten achieving the Millennium Development Goals (MDGs). This was clearly illustrated by the Asian crisis, which led to major increases in poverty in crisis countries with indirect effects on other countries, including Low Income Countries (LICs).
This initiative examined possible current vulnerabilities to financial crises in the Asian region, and made suggestions for how they could be diminished.
For a number of countries (China, Korea, Malaysia-Thailand, Indonesia-Philippines and Cambodia, Laos and Vietnam), the project assessed current potential sources of strength (such as increased foreign reserves) and vulnerability (such as bank weaknesses).
One paper was written on Cambodia, Laos and Vietnam focusing both on vulnerabilities and lessons for financial reform. Papers were also written on financial vulnerabilities in China, Korea, Malaysia-Thailand and Indonesia-Philippines. The studies focused both on the financial sector and on capital flows, and lessons were drawn, especially on financial reform for low-income countries. Separate papers were written, jointly by IDS and Asian scholars, on diagnoses and measures to reduce Asian countries’ vulnerability to crises, especially in ways that can protect the achievement of MDGs. Emphasis was placed on policy measures beneficial to poor countries and people. Development of national and regional bond markets were evaluated, and suggestions made for improvement.
The papers from the project fed into a regional conference on the subject hosted by the Thailand Development Research Institute and Thai Central Bank in early 2007. Following the conference, the papers were published in a joint IDS-Korea Development Institute Bulletin (38.4). Policy Briefs will also be prepared for dissemination in Asia.
The work was done in close consultation with the Department for International Development’s Asia Division, with Asian senior government officials and scholars, and with the Asian Development Bank. It built on the Department for International Development/Overseas Development Institute/IDS Conference on MDGs held in Spring 2006.