BUENOS AIRES: One key issue discussed among finance ministers at the G20 Leaders' Summit was how to build a more resilient financial system at a national, regional and global level, Singapore Finance Minister Heng Swee Keat said at the end of the two-day event in Buenos Aires, Argentina on Sunday (Dec 2).
The issue comes amid growing concerns about the financial market, particularly with current rising trade tensions and a potential market correction and economic downturn.
“There is concern about the current state of the financial market. In particular, the risk of building up, and we have had a prolonged period of economic upturn,” Mr Heng told reporters at the end of the summit.
“The question is: 'When is the downturn coming?', and 'How do we prepare for that?'”
Mr Heng said that financial regulation and supervision have vastly improved since the last global financial crisis, but more safety nets can be put in place at a national, regional, and global level.
“At the national level, there’s a good discussion on how each country must ensure that it does not have significant mismatches in their borrowing and their ability to repay as well as taking care of the interest rate changes and possible currency fluctuations that could create problems particularly for emerging economies,” said Mr Heng.
“So we need to look at how we can build national resilience, at the same time regional resilience, for countries in a particular region, if there’s scope for them to enhance the collaboration.”
At the regional level, Mr Heng noted that the ASEAN Plus Three countries - which include China, Japan and South Korea - have a such a safety net in the form of the Chiang Mai Initiative.
The regional financing arrangement was formed to manage short-term liquidity problems during a crisis. Mr Heng said ASEAN has been working to strengthen this programme.
Finance ministers at the table also supported the setting up of global safety nets through the International Monetary Fund.
“I’m glad that many finance ministers and leaders support the important role, the central role of the IMF in building global financial resilience,” said Mr Heng.
“There were also some discussions about the resources needed for the IMF to play this role. But the critical point is, we need to ensure good coordination between the national level, the regional level and the global level, and in particular between the regional level and the global level.”
Beyond safeguards, Mr Heng said there is also a need to develop the financial system to support structural changes.
He said: “There is a recognition that infrastructure is key to enable economies, particularly emerging economies, to continue to develop. And there, ensuring the infrastructure is structured properly, and we can create investment products which are investable, bankable, and would allow for us to crowd in for a significant amount of private capital.”
To achieve this, Mr Heng said countries must develop its workforce to prepare them for the future of work.
He added that there has been “some strong interest in what Singapore is doing in particular on both [its] education system as well as in the lifelong learning in adults” through SkillsFuture.
“There was very good discussion on what every country must do to continue to develop our education system and in particular to promote lifelong learning,” he said.