South Korea Imposes Currency Controls for Financial Stability

By Kavaljit Singh | Commentary | June 16, 2010

On June 13, 2010, South Korea announced a series of currency controls to protect its economy from external shocks. The new currency controls are much wider in scope than foreign exchange liquidity controls announced earlier in 2009.

The imposition of currency controls by the Korean authorities has to be analyzed against the backdrop of the global financial crisis. Despite its strong economic fundamentals, South Korea witnessed sudden and large capital outflows due to deleveraging during the global financial crisis. It has been reported that almost US$65 billion left the country in the five months after the collapse of Lehman Brothers in September 2008. South Korea’s export-oriented economy also suffered…

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Microfinance: Profiting from the Poor

By Kavaljit Singh | Commentary | May 2, 2010

The massive investments by private equity firms coupled with an initial public offer (IPO) by SKS Microfinance have ignited a debate about the ethics and objectives of microfinance institutions (MFIs) in India.

The SKS Microfinance, the largest MFI in India with substantial investments by private equity firms and hedge funds, is planning to raise Rs.11000 million ($250 million) through an IPO. According to media reports, the original promoters of SKS Microfinance have sold part of their stake to a hedge fund thereby making a 12-fold profit even before an IPO. This shrewd act by promoters and top management not merely raises doubts about their long-term commitments but, more importantly,…

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Reciprocal Terms Missing in the Proposed India-EU Pact

By Kavaljit Singh | Op-Ed, The Economic Times | April 7, 2009

Since 2007, India and European Union (EU) are negotiating a free trade agreement (FTA). The negotiations do not merely cover trade in goods but also include liberalisation of trade and investment in banking services. EU is seeking greater market access and national treatment for European banks through cross-border supply and direct investments.

Unlike other bilateral agreements, the potential implications of India-EU FTA would be far-reaching since nine EU-based banks together controlled 65% of total assets of foreign banks in India in 2008. By asset size, out of the top 10 foreign banks in India, six are European. Since 2000, several European economies have registered a significant growth in their banking services net…

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Europe Doesn’t Need Sovereign Wealth Funds

By Kavaljit Singh | Commentary, | November 20, 2008

French President Nicholas Sarkozy has proposed that European nations create sovereign wealth funds to protect national companies from foreign “predators.” This column says that idea is protectionist and without merit. Emerging economies establish sovereign wealth funds to invest foreign reserves or commodity revenue – not to bail out domestic firms and stifle global competition.

In a hard-hitting speech to the European Parliament in Strasbourg on October 21, French President Nicolas Sarkozy proposed that European countries create sovereign wealth funds to protect national companies from foreign “predators.” “I’m asking that we think about the possibility of creating, each one of us, sovereign funds and maybe these national sovereign funds could now and again…

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Debating Financial Services Liberalization

By Kavaljit Singh | Letters to Editor, Financial Times | July 22-August 6, 2008

Give Priority to Financial Services

Financial Times, July 22, 2008

From Sir Stephen Wright and Mr John Cooke.

Sir, Ministers from some 40 countries are meeting in Geneva to decide the fate of the Doha round of multilateral trade talks. It is vital that they achieve a breakthrough, and lay the foundation for a lasting agreement. The Doha round offers a unique opportunity to address the barriers to global trade that continue to hold back the world economy. This would bring benefits to developed and developing countries alike, and would offer some palliative to the bleak prospects facing the global economy. The focus of the negotiations so far has been on agriculture and the tariff barriers to trade in…

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