Indeed, by urging governments to aim at a fiscal position "close to balance or in surplus" in the medium term, the pact enables them to let fiscal deficits increase during recessions without exceeding the 3% reference value. In short, it allows them to create a fiscal buffer during normal economic periods that can be drawn on to counter economic divergences or asymmetric shocks. To summarise that overall issue, the “Optimal Currency Area” theory has frequently been called upon by economists who criticized EMU and expressed concerns about giving up the exchange-rate policy instrument as a response to asymmetric shocks—in particular to asymmetric shocks within a monetary union. I would like to point out, first, that one of the most remarkable effect of the European integration has been the increasing symmetry of shocks. Second, Professor Mundell himself, in support of EMU, made an interesting clarification at the beginning of 1998: in the event of a shift in demand from one member country to another, creating unemployment in the first and inflationary pressure in the second, flexible exchange rates would not be able to solve the problem. I quote: “If the argument for devaluation were valid, it could be applied to every state or sub-region in any country, with a proliferation of new currencies, so they could be devalued!”. In the same vein, other economists suggest that dealing with divergences and asymmetries should not prove much more difficult within the euro area, at least in its major countries, than within a long-established monetary union such as the US.
Ravi Menon: Singapore as a centre for fund-raising in Asia Keynote speech by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Singapore Exchange Capital Markets Symposium, 17 November 2021. * * * Ladies and gentlemen, good afternoon. Asia is becoming a global force in capital markets. In 2020, equity capital raised in the AsiaPacific region increased by two-thirds. Debt capital increased by 10%. The Asia-Pacific accounted for more than one third of global equity proceeds as well as one-third of debt issuance last year. There are three reasons why Asian capital markets are poised for continued rapid growth: dynamic companies with large fundraising needs; large pools of capital looking for investment opportunities; and effective platforms to match fundraising needs with capital Asia is fertile ground for innovative companies to thrive. With rising household incomes and increasingly tech-savvy consumers, Asian consumer markets are burgeoning. This has helped to spur a burst of entrepreneurship in Asia. We see this innovative energy across Asian cities, from Bangalore to Shenzhen, Jakarta to Manila, from Ho Chi Minh City to Bangkok, and of course Singapore. Asia is now home to a large number of high-growth companies, such as Carousell, Carro, Justco, MiRXES, and Ninja Van. To scale up, Asian companies need to raise capital. As these firms expand into more markets, they will need PE/VC funding, and eventually tap on the public markets. Asia has attracted substantial institutional funds from around the world.