Sharon Kun-amornpong is with the Faculty of Law of Thammasat University in Thailand since 2014. She holds a Bachelor of Laws from the London School of Economics and Political Science (United Kingdom). She has also obtained two Master’s degrees in Law from UCLA School of Law (USA) and the London School of Economics and Political Science (Banking Law and Financial Regulation). Currently, she is a PhD candidate at the University of Warwick (UK). Her research area is financial regulation with a focus on the banking sector.
Financial Trilemma and the Competing Conceptions of the Rule of Law: The Case of ASEAN Financial Integration
Dirk Schoenmaker has put forward an influential model of the 'financial trilemma' which demonstrates that increases in financial integration will come at a cost of financial instability. This is because national policymakers are likely to pursue their national interest rather than preserve the common good of financial stability. In other words, it is impossible to combine three main policy goals of financial stability, financial integration and national financial policies together. It is only possible to combine two of the three objectives. According to this model, increasing cross-border banking and financial integration in ASEAN with a high degree of the utilisation of national approach could generate financial instability.
In this paper, the author will discuss the financial trilemma in the context of ASEAN financial integration from the perspective of the rule of law. At the international level, the rule of law has been claimed by international organisations and governance networks as an important factor in maintaining financial stability as well as increasing the levels of financial integration and economic growth. However, those organisations and networks rarely clarify the meaning of the rule of law they have used. Meanwhile, at the national level, the rule of law is utilised as a means to ensure political stability in many countries. The author seeks to argue that there are competing conceptions of the rule of law underlying policies towards financial stability, financial integration and national financial policies used by international organisations, governance networks and national policymakers. In order to reduce the problems of the financial trilemma, those competing conceptions of the rule of law should be reconciled.