(PHOTO: BLACKDOVFX/ISTOCK BY GETTY IMAGES) Global economic integration has supported growth and lifted more than 1 billion people out of extreme poverty over the past three decades. But the forces of geopolitical fragmentation—including competing systems for cross-border payments—threaten to make the world poorer and more dangerous. In a speech on Tuesday, IMF Managing Director Kristalina Georgieva called for a new public payment system to connect various payment systems and counter fragmentation of the international monetary system accelerated by Russia’s invasion of Ukraine. --Parallel payment systems: Some countries may develop parallel payment systems to mitigate the risk of potential economic sanctions, while private digital money providers are promising cheap cross-border payments, but often within a closed network of users, Georgieva told a conference in Zurich hosted by the IMF and Swiss National Bank. “These ‘payment blocs’ would only worsen the impact of broader ‘economic blocs’—creating new inefficiencies and imposing new costs. This would harm productivity and living standards in all countries.” A new public payment system, which uses technology to connect various forms of money, including commercial bank deposits but potentially also central bank digital currencies and even some stablecoins, could make payments work for all people, in all countries, Georgieva said. --Question of governance: Questions of governance such as who would oversee these platforms will ultimately be decided by countries, but international organizations such as the IMF, the Bank of International Settlements, and the Financial Stability Board could play an important role, she added. “Together, we can put the international payment system on a sounder footing—to support the digital world of tomorrow, to foster an international monetary system that can bring greater stability and prosperity for all.” Watch Georgieva's speech and read a transcript here. Read a new Fintech Note on the challenges of managing capital flows in the digital age, and find all the IMF's content on Fintech including blogs, papers and videos here. (PHOTO: PEXELS/ETHAN BROOKE) Korea has recovered well from the pandemic and economic output has surpassed pre-crisis levels despite multiple waves of infection, a testament to strong economic fundamentals and appropriate policy responses, the IMF’s Martin Kaufman and Krishna Srinivasan write in a new Country Focus article. Before the war in Ukraine, Korea’s growth was expected to remain robust this year and next, with inflation projected to gradually return to target by next year, as reflected in a recent IMF report. But significant uncertainties were already clouding the outlook, with downside risks arising mainly from pandemic-related disruptions to supply chains, geopolitical uncertainties, and rising interest rates in major advanced economies. Moreover, Korea faced domestic downside risks linked to weakening economic activity from rising COVID-19 infections, elevated household debt and real estate prices, and rising inflation. The effects of Russia’s invasion of Ukraine and related sanctions have exacerbated concerns about stagflation risks. Specifically, the increase in commodity prices, particularly of energy, has been fueling inflationary pressures even as the adverse impact of the war on trading partners and recent developments in China could significantly weigh on economic activity in Korea. So far, however, Korea’s recovery appears relatively resilient. Click here for all the IMF's Country Focus articles and videos. (PHOTO: IMF) July 1997 marked the beginning of the Asian financial crisis, when a combination of economic, financial and corporate problems triggered a sharp loss of confidence and capital outflows from the region’s emerging market economies. In 2000, the Association of Southeast Asian Nations plus China, Japan, and South Korea (ASEAN+3) created a network of bilateral currency swaps intended to provide short-term liquidity in a future crisis. A macroeconomic research office, known as AMRO, conducts regional surveillance and supports the swap initiative. In the latest of our Café Economics series of interviews, F&D Magazine’s Chris Wellisz speaks to Hoe Ee Khor, AMRO’s chief economist and co-editor of a newly published book, Trauma to Triumph: Rising from the Ashes of the Asian Financial Crisis, about the lessons from that crisis, how Asian economies fared in the pandemic, the effect of the Ukraine war on the region, and why he does not believe the world economy is headed toward a period of deglobalization.  | | Visit Us OnlineFor other recent articles, including Also read our three-part series on The Future of Inflation, by Ruchir Agarwal and Miles Kimball. Want to a print copy delivered to your home or office? |
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