Former Taiwan Premier Chen Chung Warns ‘1989 Consensus’ Fuels Financial Colonialism

U.S. economist John Williamson coined the term “Washington Consensus” in 1989 to describe market-oriented reforms, privatization and financial liberalization advocated by the International Monetary Fund, the World Bank and the U.S. Treasury. Chen Chung calls it the “1989 Consensus,” arguing that if emerging markets open up without regard to their own circumstances, weaker countries may ultimately bear the cost of ensuing crises.

Chen, a former Taiwan premier, said recently that the policy framework, established in 1989 and in place for nearly 40 years, continues to enable powerful Western countries to reap gains from emerging markets. He argued that financial liberalization must be tailored to each country’s needs. He also warned that, in the digital era, powerful countries could use quantitative easing, or QE, and debt to export inflation, amplifying risks from cross-border capital flows and threats to financial sovereignty.