Åsa Malmström Rognes

PurposeThe purpose of this study is to examine whether regulations can prevent financial crises based on the case of Sweden in the 20th century. The evolution of banking regulation relies heavily on learning across borders as well as responding to recent and remembered crises. Sweden went from being an open economy with a highly protected national banking system with several banking crises under the Classical regime, through the Statist regime with no crises followed by abrupt liberalisation in the 1980s as the country changed to a more market-based regime. This study examines the regulatory responses to crises in each of these periods to assess how, and whether, an often backward-looking regulatory framework can address forward-looking risks. Design/methodology/approachThis study is a qualitative study using a historical method. The authors use archival material, official publications and statistical data as well as secondary literature to succinctly analyse crises and regulatory responses in different regulatory regimes in the 20th century. The theoretical framework builds on three macro- and microeconomic policy regimes, the Classical, the Statist and the Market regime. FindingsThe authors find that regulations can play a decisive role in alleviating a banking crisis, but the relationship between regulations and economic development is complex, and regulations alone cannot prevent a crisis. Originality/valueTo the best of the authors' knowledge, this is the first longitudinal study of banking regulations in Sweden and how these change in response to crises with the aim of improving the role of banks in financial intermediation and financial stability. This study contributes to a body of literature on financial crises with a long-term perspective and an assessment of regulations as a policy response.

Currency boards have had an enduring attraction as a solution to exchange rate and monetary credibility for small open economies, despite few successful examples. In this context, the case of Hong Kong stands out for its longevity; it survived the handover to China, the Asian financial crises in 1997, and the global crises in 2007–8 and 2020. The 1983 currency crisis and the decision to link the exchange rate to the US$ is usually treated as an outcome of local political uncertainty due to the Sino‐British negotiations which set the framework for how Hong Kong would fit with the rest of China after 1997. We present fresh archival evidence from Hong Kong and London to reveal the year‐long debates over Hong Kong's monetary system after a drop in the exchange rate in September 1982 and to demonstrate how most of the protagonists in Hong Kong and London came only reluctantly to accept the idea of re‐pegging the dollar once public expectations had been raised. We also show how the mixture of currency and banking instability affected the terms of the negotiations in 1982 and 1983 and set the framework for the one country, two currencies system that prevails today.

The regulation of bank capital has evolved from minimum capital requirements for joint-stock banks to elaborate risk-based capital adequacy rules. How did these regulations come about? How and why have they changed over time in different coutnries? Sweden began to regulate minimum capital in the nineteenth century. In 1911 an early version of capital adequacy was introduced. In addition to stringent regulation a separate inspection agency was given wide-ranging powers to ensure compliance. Britain also had minimum capital rules in place but during the twentieth century these two countries followed different paths in regulation and supervision of capital rules. This paper examines the Swedish case in detail and contrasts that with the British case. It is suggested that their respective civil and common law traditions may explain the divergent approaches to defining and regulating capital adequacy.

In this article, Patrik Ström, Marie Söderberg, and Åsa Malmström Rognes discuss the importance of Strategic Partnership Agreements (SPA). With COVID-19 and tensions between China and the USA, SPAs can play an important role to foster creativity and innovation. Focusing on the SPA between the EU and Japan, the authors highlight three critical innovation areas – connectivity, health, and multilateral collaboration. By using COVID-19 as a catalyst, strengthening collaboration between countries, but also between state and private organizations can help to drive innovation and economic prosperity.

Official development assistance is being redefined and the calculation method updated. This is partly in response to meeting the financing needs for the new sustainable development goals and partly in response to the emergence of new donors whose policies and practice towards development assistance differs from Western donors. This paper traces development thinking and policies in the post-war era in general and examines Japan and China in particular as these countries have a different approach to development assistance and cooperation.

This paper analyses the AIIB; its mandate, resources, governance and how it compares to the other multilateral development banks operating in Asia. When China proposed a new multilateral development bank in Asia devoted to infrastructure, there were numerous questions raised. These included whether there was really a need for another development bank, whether the new bank would have sufficiently high environmental and social safeguards and be as transparent as the existing ones. This examines the AIIB in comparison to the existing multilateral development banks in Asia and in particular the ADB with its emphasis on infrastructure. The paper finds that there is certainly a need for more funding but it isn’t clear that it is best met by another multilateral.