Macroscope | Global financial problems lie in local difficulties

There's a lot wrong with the global financial system, as any cursory look at this column over the past six months or so would have made clear.

Take your pick of problems: the crisis in Greece threatening to destroy the euro; the hot money flows triggered by the quantitative easing unleashed to reflate the economies of the United States, Britain, Japan and now Europe; the unilateral move by Switzerland to abandon its currency policy that sent global markets reeling; the political rivalries in competing trade pacts that are stalling a global deal to cut tariffs on goods and services.

And while that's just the handful of pressure points that come to mind, they offer an instructive guide to the underlying issue facing our increasingly interconnected international financial architecture, according to Julia Leung Fung-yee, Hong Kong's former top financial diplomat.

"Finance has become global, but the rules are still local," she says.

There's a lot to be said for that observation, particularly from an official who witnessed the repeated failings of the system from her ringside seat at the meetings of international policymakers between the eruption of the Asian financial crisis in 1997 and her departure from government in 2013.

But it's worrying that it remains the case more than 40 years after arguably the most famous utterance on international financial co-operation - or the lack of it - from then US treasury secretary John Connally, who dismissed the fretting of European counterparts about the decline in the greenback with the words: "The dollar may be our currency, but it's your problem."