The adaptation of monetary policy to the constraints of the global financial crisis by central banks of ASEAN-5 countries

• Author: Botis S.
• Pages: 269-276

Bulletin of the Transilvania University of Braşov

Series V: Economic Sciences • Vol. 8 (57) No. 2 - 2015

The adaptation of monetary policy to the constraints

of the global financial crisis by central banks of

ASEAN-5 countries

Sorina BOTIŞ1

Abstract: Global financial crisis represented an important test for central banks, generating

multiple challenges that gave rise to both expanding their monetary policy tools and

redefining its role in the financial system. The present work aims to identify the

characteristics of the monetary policy by the central banks of the five countries belonging to

ASEAN-5 Group(Indonesia, Malaysia, the Philippines, Singapore and Thailand), during and

after the outbreak of the international financial crisis. For this purpose we carried out a

comparative analysis between the five central banks belonging to the Group, both in terms of

the challenges of the monetary policy and the type of measures taken in response to the first.

The analysis shows that central banks have different levels of responsibilities, corresponding

to the internal economic and financial realities, and also different ways of adaptation and

adjustment of their monetary policy.

Key-words: ASEAN-5, central bank, monetary policy, inflation targeting, key interest rate

1. Introduction

Triggered initially in the United States, the last economic and financial crisis has

expanded rapidly in Western Europe and, amid globalization, spread fastly

worldwide, changing the shape of the world economy. The objective of this paper is

to examine how the Asian financial crisis affected the major ASEAN -5 countries:

Indonesia, Malaysia, the Philippines, Singapore and Thailand, how they were

affected indirectly by their connection with the global market, considering that the

liberalization of financial flow has led to increasing foreign investment banks on the

internal market.

External dependency has been a weakening of national financial system by

generating a bigger burden for central banks of these countries.

Thus the financial crisis hit the economy through the trade channel, as a result

of economic openness. To emphasize the importance of foreign trade, figures 1 and

2 show the evolution of the value of exports and imports in goods and services of

1 Transilvania University of Braşov, sorina.botis@unitbv.ro