East Asia is home to three of the biggest economic powerhouses in the world: China, Japan, and South Korea. Thus, the well-being of the global economy often depends on the region's pecuniary health. Central banks already hold the utmost power in this regard; yet, in recent times, each nation's bank has led endeavors to consolidate further economic control. The effects of these measures, along with last week's global market shakeups, have paved a path of economic uncertainty. Here is a look at recent developments in East Asian central banks.
Over the course of the year, China has attempted to centralize market regulation and control within its central bank, the People's Bank of China (PBOC). The president, Xi Jinping, created a plan for focusing regulation of the banking, securities, and insurance industries all under the PBOC. While the government has shied from any major policy changes, certain measures have been proposed, including increased oversight of investment and wealth management products. This kind of financial domination is harder to pull off in Japan, where cash use is still popular. Recently, the Bank of Japan has found it difficult to curb interest rates; they have instead turned to bond-buying and other direct monetary policy measures to help boost its economy.
The opposite holds true in China and South Korea, where central banks are trying to establish their own blockchain-based digital currencies in an attempt to compete with Bitcoin. Two of the latter currency's biggest exchanges are based in China, and it remains increasingly popular in the country due to its ease of use within and across borders. The Chinese government has not been able to regulate Bitcoin use as tightly as it would prefer; thus, establishing its own digital-based currency may grant the government more power for this purpose. South Korea is further along in developing their own blockchain currency, which they hope to test with their financial industry before the end of this year. Central banks see several advantages in utilizing cryptocurrency in lieu of cash: security, efficiency, and ease of oversight.
Overall, the trend of central banks in East Asian economies is gravitating toward tighter control of national investment and currency systems. It is yet to be seen how this will impact the global economy, but one thing is for sure: the desire for stringent financial regulation is very apparent in this region.