| |
Ethos Perspectives
Possible Discontinuities in the Post-Crisis World
There have also been growing calls for the world to be less dependent on the US dollar. China has recently suggested that US dollar-denominated assets could be exchanged for more Special Drawing Rights from the International Monetary Fund (IMF), while Japan and Russia have respectively voiced their support for the yen and the rouble to be the base unit of currency exchange in Asia and the ex-Soviet Union states, replacing the US dollar.17
Implications for Singapore
The prospects of increased regulation suggest that future financial innovation will most probably come at higher cost(s), contributing towards slowed growth for financial sectors.8 In other words, investors will be primarily attracted to stable and secure markets to store capital, rather than risk investing in new and emerging markets or industries. Hence, a country’s international reputation and standing will factor more prominently as criteria for attracting capital inflows.
Singapore will face increased pressure to conform to international standards that may erode its competitive advantage, for example, calls to agree to the OECD’s standards for transparency and exchange of information.18 In addition, our financial regulators and institutions may need to address further uncertainty in managing monetary and exchange policy or investment portfolios, should new supranational currencies arise to displace the US dollar.
Possible Discontinuity #4: From US Unilateralism to Global Multilateralism
Based on current trends, the 2025 international geo-political system is projected to be markedly different from the present order.19 This change can be seen as the latest development in the evolution of an increasingly complex world order, driven by greater diffusion of power. After the Cold War, the international system evolved over time to become "uni-multi-polar",20 where the US remained the only superpower, but was steadily counterbalanced by the gradual "rise of the rest"21 — regional powers such as Iran, Brazil, Russia, China and India.
Due to the severity of the financial crisis, looking ahead, the world is likely to become increasingly "multi-polar", where strong regional nations compete, conflict and coalesce with each other and alongside influential non-state actors, such as multinational corporations, in the absence of a "global policeman".22 Should more supranational and sub-national entities (i.e., influential city-states) emerge to contest for power and influence in the international arena, the world could even be shifting towards an era of "non-polarity", where power is even more diffused.23
Implications for Singapore
As one of the most globalised countries in the world, Singapore will have to be prepared for an increasingly fragmented and chaotic world order as multi-polar systems have historically tended to be unstable. We may have to consider whether there is a need to augment our strategic alliances by establishing even closer ties with China — by 2025, China is projected to overtake Japan as the world's second largest economy.19 At the same time, there may be value in continuing our current pro-ASEAN-integration stance, to compete effectively against the increasingly influential East Asian bloc.
I I
|
|
