I would like to talk about some issues that come to mind when thinking about financial integration. In doing so, my aim is to pose questions that the ACFS work might consider, without providing any answers. The first issue is about developments over the past decade or so, which show that financial integration is not a monotonic process.
It is not always onwards and upwards. There was a reversal in some metrics of financial integration after 2008. In particular, cross-border banking flows declined steeply in 2008 and 2009, and have, in aggregate, continued to shrink until fairly recently. Interestingly, cross-border flows involving Chinese and Japanese banks have been increasing while those elsewhere, particularly in Europe, have been declining.