Ramkishen S. Rajan

United States–China economic statecraft increasingly depends on choke points within supply chains, trade routes and cross-border payment infrastructures. The article contends that leverage concentrated in these choke points functions as depletable infrastructural capital. Such leverage is effective when dependence is concentrated and substitutes are scarce, but repeated activation can erode it. Each round of sanctions or export controls reveals where pressure can be applied, prompting firms and third-country intermediaries to invest in rerouting, alternative processing capacity and redundant settlement channels. As these adjustments become embedded in durable infrastructure, the marginal disruption caused by additional measures decreases, while the marginal enforcement effort required to maintain comparable pressure increases. The analysis examines episodes involving rare-earth processing, successive semiconductor export controls, south-east Asian trade diversion and origin governance, and emerging payment corridors. Across these cases, coercion reshapes interdependence by redirecting flows through intermediary jurisdictions without eliminating underlying dependencies. Erosion can arise without deliberate strategic intent, although the choices of allies, intermediary hubs and hedging middle powers influence its pace and form. Repeated coercion thus redistributes rather than eliminates hierarchy, and past effectiveness becomes an increasingly weak guide to future coercive capacity.

Climate change poses financial risks to individual firms and is a source of systemic risk to the stability of financial systems. Central banks are emerging as key state actors in environmental governance to tackle these risks, implementing policies encompassing regulatory oversight, credit guidance, and the greening of prudential regulations. The diffusion of these policies across countries is at various stages of deliberation and implementation. In this context, this article uses a newly constructed index measuring the intensity of green financial and regulatory policies imposed by central banks of various developed and developing countries from 1996 through 2018. We empirically assess whether central banks in countries that are more vulnerable to climate change are more likely to be implementers of these policies and find robust evidence in support of our hypothesis.

Aimed at preserving firm-level and macro-financial stability against climate-related physical and transition risks, green financial policies are often viewed as complements to fiscal policies. While the latter are aimed directly at an economy-wide state-led green transformation, the former are targeted specifically towards the financial sector. In this context, this article makes two contributions to the climate change/green finance literature. First, it creates a green financial policy intensity index which measures the cumulative number of such policies rolled out by countries from 1995 till 2021. Second, it empirically examines the nexus between the uptake of these policies and fiscal space. Our findings suggest that higher physical and transition climate risks are associated with more green financial policies being undertaken, but only for countries with limited fiscal space or a high fiscal deficit.

The effectiveness of an exchange rate based monetary policy rule for Singapore given the highly open nature of the economy has been empirically well documented in the literature. However, what is somewhat less recognized is that monetary policy in Singapore has historically been conducted in an asymmetric manner where there is willingness to allow for greater appreciation of the nominal effective exchange rate (NEER) during boom periods to curb inflation but not to implement a policy of depreciation during a downturn, i.e. a strong Singapore dollar (SSD) policy. We contribute to the literature by being one of the first to test the empirical validity of a SSD policy. We do so by estimating a Taylor style monetary policy rule (MPR) for Singapore with NEER as the main instrument of policy using monthly data for 2000 to 2019. Our empirical findings suggest that Singapore’s MPR appears to react asymmetrically to inflation and output above a particular threshold but is predominantly concerned with inflation in the policy rule, offering evidence of a policy position consistent with SSD in that it allows for disproportionately higher NEER in boom periods.

Green financial policies are increasingly being implemented by countries to mitigate the physical and transition risks posed by climate change. Aimed at preserving firm-level and macro-financial stability amidst climate-related risks, such policies are often viewed as complements to fiscal policies. While the latter are aimed directly at an economy-wide state-led green transformation of industries and infrastructure, the former are targeted specifically towards the financial sector and are therefore considered as facilitative or ‘second-best’ policy responses to climate change. In this context, this paper makes two important contributions to the climate change/green finance literature. First, it creates a green financial policy intensity index which measures the cumulative number of green financial policies rolled out by countries from 1995 till 2021. Second, it is one of the first papers to empirically examine the nexus between the uptake of green financial policies and fiscal space. Our findings suggest that higher climate risks are associated with a greater number of green financial policies being undertaken, but only for countries with limited fiscal space or high debt to GDP ratios. Countries with adequate fiscal space do not exhibit this relationship, and the direction of impact suggests that high climate risk countries may be associated with a lower green financial policy uptake for this subset of countries.

Fintech, broadly encompassing financial innovations enabled by digital technology, has seen phenomenal growth across emerging and developing economies (EMDEs) over the last few years. While the fintech revolution can facilitate broader financial inclusion and spur overall economic growth, concerns have been raised about the possible impact of fintech on growth volatility. Using a selected heterogeneous panel of 40 EMDEs spanning 2009 to 2017 we find that greater digital financial inclusion persistently exacerbates output volatility, although this result holds true only in countries with low banking concentration. Our results are robust to both different definitions of digital financial inclusion and alternative methodologies controlling for potential endogeneity.