1. Working Together for a Better Future
Asian Central Banks

2. The Asian Financial Crisis

3. The Setting of The Stage Before the Crisis (Alan Shapiro, 2005)
Export Oriented
Foreign Currency Denominated Debt
Government Directed Capital Allocation
Overvalued Currencies

4. The Experience and Aftermath (Alan Shapiro, 2005)
Chinese yuan against USD (25 %)
Waves of currency selling ( %)
Huge debt in dollars
Capital flight (stock market crashes)
Banking systems disrupted
Economies contracted

5. Lessons Learnt (Frederic Mishkin, 1999)
Central Bank lender of last resort
International capital flows
Foreign Currency Denominated Debt
International Foreign Reserves

6. Source: IMF, World Economic Outlook, October 2008

9. From the Asian Crisis to the Sub-prime

10. The Interval (IMF, 2008) Relatively Low Exchange Rates
Current Account Surpluses (Oil & Exports)
Large Accumulation of Foreign Reserves

11. Source: Bank of Canada
Source: Sovereign Wealth Fund Institute, IMF, and other Governmental Sources

12. Roads to the Sub-prime Mortgage Crisis (IMF 2008)
Foreign Reserves
Sufficient Cushion against External Financial and Economic Shocks
Transferring Assets to Sovereign Wealth Funds ($2-3 trillion)

13. Largest Sovereign Wealth Funds by Assets
Country
Fund Name
Assets $Billion
Origin
UAE - Abu Dhabi
Abu Dhabi Investment Authority
$627
Oil
Saudi Arabia
SAMA Foreign Holdings
$431
China
SAFE Investment Company
$347.1
Non-Commodity
China Investment Corporation
$288.8
Singapore
Government of Singapore Investment Corporation
$247.5
Kuwait
Kuwait Investment Authority
$202.8
National Social Security Fund
$146.5
Non-commodity
China - Hong Kong
Hong Kong Monetary Authority Investment Portfolio
$139.7
Temasek Holdings
$122
Qatar
Qatar Investment Authority
$65
Brunei
Brunei Investment Agency
$30
Malaysia
Khazanah Nasional
$25
Source: Sovereign Wealth Fund Institute

14. Financial Markets Equities Sovereign Debt Corporate Debt Real Estate
Infrastructure

15. Evolving Central Banks (Frederic Mishkin, 2000)
Monetary Policy
Open Market Operations, Overnight Policy Rates, Reserve Requirements, Discount Rates
Financial Markets
Temasek Holdings UBS
Abu Dhabi Investment Authority Citigroup

16. Contributing Factors to the Crisis (Newsweek 2008)
Besides Mortgage Bankers, Wall Street, Credit Rating Agencies
The Federal Reserve
China, Japan and other Sovereign Wealth Funds

17. Source: Bloomberg, The Star

18. Challenges in the Next Society

19. Virtual Banking and Virtual Money
The Next Society
BRIC Countries
Virtual banks - increasing significant (Mishkin F.S., 2007)
E-commerce - virtual money (no physical existence) (Peter F. Drucker, 2002)
Virtual Banking and Virtual Money

20. The Next Society Islamic Financing Aging Population
Standard and Poor’s estimates that around $750 billion of assets – shariah-compliant management
Islamic Financing
Guardian (21 July, 2009), global population of 65 and over is set to outnumber children under five
Aging Population

21. Opportunities – The Road Ahead
Worker productivity
Financial centre
High growth (China and India)
Tele-communication
Transportation
Public Transport
Trade
Infrastructure

22. Opportunities – The Road Ahead
Agriculture and Commodities

23. Opportunities – The Road Ahead
Decline in manufacturing (Peter F. Drucker, 2002)
Knowledge products such as the education - tripled in cost
Education
Islamic Banking Hub
Petro-dollars
Islamic Banking

24. Facilitating Development
Supporting commercial banks
Helping companies (involved in these industries) to raise capital
Bonds
Equity

25. Question and Answer
Session