Tools to manage risks from large economies long overdue

IN a series of articles published in Asia and Europe in 2013, including one published in The Business Times on March 8, 2013, I advocated the need to design ad hoc risk management instruments on the Chinese economy, arguing that China's ability to durably transition to the top spots in the world was posing a heightened risk for the global economy.

Drawing a comparison with the Global Financial Crisis of 2008, I explained that the US sub-prime crisis exemplified the damages that a large economy's shortcomings can do to the rest of the world.

I candidly asked: "Do we want to replicate the experience? Can finance learn from historians, and focus on systemic risks including those stemming from the (Chinese) economy which is defining today the world of tomorrow at a headlong pace?"