ASEAN Banks Now Better Placed to Address Volatility

...Banks in Better Position than in 1990s: Fitch Ratings believes that the banking systems of Association of Southeast Asian Nations (ASEAN) member countries are better prepared for potential market volatility emanating from US monetary policy normalisation than during the period leading up to the 1997 Asian financial crisis. However, there are pockets of vulnerability, such as in Vietnam due to its high dependence on foreign capital and the banking system's rapid loan growth despite thin capital buffers. Safety Nets Improve Resilience: Enhanced regulatory frameworks and domestic crisis response mechanisms, more proactive macroprudential surveillance and stronger financial profiles in the years since the crisis and the previous Fed rate tightening cycle in 2004-2006 have improved ASEAN banks' resilience to market volatility. ASEAN economies also have stronger buffers and more accommodating macroeconomic policies. The flexible post-crisis exchange-rate regimes have allowed foreign-exchange...

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