Comments from West Java: When Christine Lagarde took the stage, all eyes turned to her. It was her highly anticipated speech the audience wanted to hear the most. Sitting in the back row, I could tell that she was the star of the Bank Indonesia- International Monetary Fund (IMF) joint conference, “Future of Asia’s Finance: Financing for Development 2015.” The extensive debate and controversy over policies exercised by the IMF over these past years did not stop experts, academics, policymakers and practitioners around the globe from hoping for more. Pinning down their aspirations on this international financial institution for remedies to cure the ongoing global economic recession, the words of its commander-in-chief on any given event drew all ears.
Nonetheless, from my personal observation during the session, there was nothing new in Lagarde’s remarks. Her remarks were like old repetitive forgotten recipe for a dish. The aroma was somewhat familiar, the overall presentation was inviting and the taste was delectable, yet it did not jolt my taste buds.
The four “I” formulas, namely innovation, infrastructure, integration and inclusion are not new concepts among policymakers in emerging markets, particularly Indonesia. Notwithstanding, Indonesian policymakers have carried out efforts to maintain the country’s financial stability and resilience right after the 1997/1998 economic crisis. Bank Indonesia is an ardent campaigner of financial inclusion, strengthening the role of Islamic banking in financing, upgrading an integrated payment system gateway and so forth to tackle challenges ahead to achieving financial stability.
What I find interesting is the refreshing remarks presented by Andrew Sheng, the distinguished fellow of Asia Global Institute and chief advisor to China Banking Regulatory Commission. He rightly offered incisive views and critiques on the problems and issues of the current global financial world. The unconventional monetary policy of zero interest has created oceans of liquidity. The global economy faced increased risk of inflated bubbles as investors easily acquired mountains of highly leveraged debt that increased their excessive risk taker appetite.
Against this backdrop, Andrew Sheng mentioned the fifth “I”, which was actually the driver of inclusive participation in the economy, namely “incentive” to tackle the global imbalances. He elaborated that future finance needed incentives to act or to persuade society to act against disaster myopia in the face of growing evidence of rising risks. The future is about incentive. It is about long-term investment. It is about risk sharing and it is about ownership. It is no longer about mere personal gain but it should also be about social gain for the overall economy to survive together.
In the end, I agree with Sheng that there can be no “one-size-fits-all” solution for global problems, because the world is too diverse and heterogenic.
