Banking

Cross-border banking in Asia and its Pacific region has increased over the last decade, interrupted only by the 2007−09 crisis. This steady increase cloaked a significant modification in the pattern of economic intervention. During the global banking boom of 2001−07, mostly there was flow of money from the US to Europe and then to the Asia- Pacific region and back to the US, with the European banks serving as intermediaries.

There seems to be an intraregional trend and ASEAN governments have recently adopted a regional banking integration framework. This will permit banks qualified in one member jurisdiction to work freely in others. An increase in the number of big regional banks might bring gains however might enlarge channels of regional contagion.

There has been shifting patterns in world banking, particularly cross-border provision of dollar credit particularly with reference to the Asia-Pacific region. In the time before the 2007−09 crisis, world banks leverage to produce cross-border dollar funding as well as European banks played a distinguished role in cross-border dollar intervention. After the crisis, low interest rates, new regulations of banking resulted in major cross border financial changes. There were asset managers replacing global banks investing in long term debt securities.

The last decade saw a powerful increase in cross-border banking in the Asia-Pacific region. During the period commencing 2002 till 2007, Asia-Pacific banking virtually increased four-fold to $844 billion. In 2007, euro banks accounted for a third of those claims, Asia-Pacific banks the same share, and the Swiss and US banks for a third. During the same period banking rose lesser in the Caribbean and Latin American region but more for the rising European economies.