Compliance with international regulatory regimes: The Basel Capital Adequacy accord in Japan, South Korea, and Taiwan, 1988-2003.

The IPE literature on compliance has presented three theoretically competing mechanisms to induce compliance with international regulatory regimes: externality- based, market, and domestic compliance mechanisms. However, most studies on compliance have limited their analytic focus to formal compliance with explicit provisions of regimes, neglecting the question as to whether formal compliance enhances regime effectiveness, which is the fundamental issue of compliance. Yet, although national authorities implement an international regulatory regime, they frequently manipulate the implementation to help regulatory targets formally comply with its explicit provisions but still allow them, in practice, to defect from its objectives. This study introduces the concepts of cosmetic compliance and comprehensive compliance, and it analyses the effectiveness of the three compliance mechanisms in ensuring comprehensive compliance by addressing compliance with a momentous international financial regulatory regime, the 1988 Basel Capital Adequacy Accord, in three important Asian countries, Japan, South Korea, and Taiwan, from 1988 to 2003. All three countries were formally in compliance with the regime throughout most of the period. However, Japan's compliance was consistently cosmetic, while Korea and Taiwan also complied cosmetically during much of the period. A high degree of comprehensive compliance occurred only in Taiwan during the early 1990s and in Korea during the late 1990s and early 2000s. All three compliance mechanisms contributed to formal compliance. However, the externality-based compliance mechanism and the market compliance mechanism were not effective in ensuring comprehensive compliance. The operation of the domestic compliance mechanism was necessary for comprehensive compliance; yet, its effectiveness relied on the capacity of national authorities to implement it. As a result, the actual outcome of the operation of the domestic compliance mechanism was affected by domestic factors, in particular, the capacity to deal with formal compliance failures by regulatory targets, the domestic distributional effects of compliance, and the independence of the regulatory authority

Civilisational values and political economy beyond the West: The significance of Korean debates at the time of its economic opening

This paper analyses the prominence of civilisational values in Korean political economy debates in the late 19th and early 20th centuries concerning their country’s dramatic opening to the world economy at the time. Korean supporters of economic opening saw this policy change as part of a wider embrace of Western civilisational values, while opponents argued that their country’s longstanding economic autarchy upheld traditional Neo-Confucian civilisational values that had been imported from China. For international political economy (IPE) scholars interested in the historical relationship between civilisational values and political economy, the analysis shows how these values shaped understandings of international economic relations outside the West in quite distinctive ways. For IPE scholars interested in the diffusion of ideas, the analysis highlights different dynamics involved in the ‘localisation’ of ideas emanating from dominant powers. More generally, the study of this Korean history also contributes to the building of a more ‘inter-civilisational’ approach to IPE today.Social Sciences and Humanities Research Council of Canada, Grant 435-2015-057

Global Finance Meets Neorealism: Concepts and a Dataset (SWP 59)

How might one conceptualize the international political dimensions of money and finance? As the world moves from a post-Cold War “unipolar moment” toward the greater uncertainty associated with multipolarity – or bipolarity/multipolarity – the zero-sum aspects of economic resources may take on heightened significance in national calculations. The paper proposes five national financial characteristics that sovereign governments sometimes wield as power capabilities: the country’s (1) position as an international creditor, (2) home financial market attractiveness, (3) currency strength, (4) international debtor presence, and (5) leverage in global financial governance. A new dataset on the global monetary and financial powers of states (GMFPS), covering 180 countries and 27 indicators from 1995 to 2013, constructs indices for four state financial power concepts, and also provides an updated overall material capabilities index. After profiling the US, Britain, Germany, Japan, and China, we suggest a recurring, although not inevitable, financial life cycle of major powers. &nbsp

The Concepts, Consequences, and Determinants of Currency Internationalization

経済学 / EconomicsThe international statuses of currencies shape a fundamental characteristic of the international monetary system, which has significant impacts on the world political economy by affecting the political as well as economic relationships among states. The study of international currencies has been long dominated largely by economists, however, with political economy research in this area quite underdeveloped. However, the 2008/9 global financial crisis, the subsequent European debt crisis and the recent active Chinese promotion of renminbi internationalization have spurred new and considerable interest among political economists on issues surrounding international currencies. Political economy study of international currencies has thus been gradually growing of late, and making notable progress.This study provides a comprehensive and systematic review of the literature on international currencies—covering both political economy and economics—with the primary aim of building a useful groundwork to help develop a better research framework for the political economy study of them. In particular, it discusses the international currency concept, the costs and benefits of international currency issuance, the determinants of currency internationalization, and the future prospects of the current dollar-centered international monetary system. This research in addition highlights a group of important issues that need further investigation by future political economy study of international currencies, by drawing special attention to the following issues: historical events, the political determinants of currency internationalization, government policy strategies, and the consequences of international currency choice.http://www.grips.ac.jp/list/jp/facultyinfo/chey_hyoung-kyu

Why Did the US Federal Reserve Unprecedentedly Offer Swap Lines to Emerging Market Economies during the Global Financial Crisis? Can We Expect Them Again in the Future?

経済学 / EconomicsThis paper provides a political economy analysis of why the US Federal Reserve unprecedentedly established temporary reciprocal swap lines with a select four emerging market economies during the global financial crisis of 2008-09, thus acting as global lender of last resort for US dollars. It argues that the swap lines reflected the great US need to reinforce its ties with major emerging market economies at that time, when a new global economic governance system had emerged—led by the Group of Twenty, which encompassed these economies among its members. Yet it also stresses the uniqueness of the international situation at that time, implying a low likelihood of the Federal Reserve providing swap lines for emerging market economies again in future systemic crises, and the need therefore to further strengthen the global financial safety net.http://www.grips.ac.jp/list/jp/facultyinfo/chey_hyoung-kyu

Can the Renminbi Rise as a Global Currency? The Political Economy of Currency Internationalization

経済学 / EconomicsCan the renminbi develop into a global currency? In the near future it seems unlikely. The international political power of the United States remains far greater than that of China at the global level, and is likely to be a significant obstacle to global expansion in use of the renminbi. China’s limited economic size—despite its rapid growth over the past decades—and its persistent current account surplus are in addition likely to pose serious economic checks on global use of the renminbi. Thus, although renminbi internationalization will probably develop to some extent, it is at least in the short term likely to be confined to Asia, China’s hinterland.http://www.grips.ac.jp/list/jp/facultyinfo/chey_hyoung-kyu