FMs' to discuss currency pact overhaul
The ministers are likely to discuss a multi-nation currency swaps scheme to improve the existing system.
By Agencies |
KYOTO: Asian finance ministers meet Saturday to discuss an overhaul of their regional currency pact to make it easier to borrow emergency funds to defend against speculative attacks.
With the Asian financial crisis still a painful memory a decade after it threw the region into turmoil, ministers will seek to deepen financial ties and spur already rapid economic growth.
Finance ministers from the Association of Southeast Asian Nations (ASEAN) as well as China, Japan and South Korea will discuss a multi-nation scheme of currency swaps to improve the existing bilateral system introduced in 2000.
They will also seek to foster Asian bond markets and may discuss the massive tide of capital flows into the more open economies, whose exporters are struggling with stronger currencies that damage their competitiveness.
Now 10 years after the crisis there are indications that new capital inflows are coming into Asia -- a lot of liquidity at the global and regional level," said Indonesian Minister of Finance Sri Mulyani Indrawati.
"The question is how, should we deal with it?" she said during a seminar on the sidelines of the Asian Development Bank's annual meeting in Kyoto.
turmoil.
Under the accord, an Asian country in financial trouble can borrow foreign currency -- usually US dollars -- from another to bolster its international reserves until the crisis passes.
Asia now holds the bulk of the world's foreign reserves at some $2.7 trillion, led by China which alone has more than one trillion dollars.
With the Asian financial crisis still a painful memory a decade after it threw the region into turmoil, ministers will seek to deepen financial ties and spur already rapid economic growth.
Finance ministers from the Association of Southeast Asian Nations (ASEAN) as well as China, Japan and South Korea will discuss a multi-nation scheme of currency swaps to improve the existing bilateral system introduced in 2000.
They will also seek to foster Asian bond markets and may discuss the massive tide of capital flows into the more open economies, whose exporters are struggling with stronger currencies that damage their competitiveness.
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While a decade ago many countries in the region were running current account deficits, many now have large surpluses and swelling foreign exchange reserves because of export-driven expansion.Now 10 years after the crisis there are indications that new capital inflows are coming into Asia -- a lot of liquidity at the global and regional level," said Indonesian Minister of Finance Sri Mulyani Indrawati.
"The question is how, should we deal with it?" she said during a seminar on the sidelines of the Asian Development Bank's annual meeting in Kyoto.
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In the wake of the 1997 Asian financial crisis, the 10 ASEAN nations plus Japan, China and South Korea agreed to set up a bilateral currency swap scheme known as the Chiang Mai Initiative in a bid to prevent a repeat of the turmoil.
Under the accord, an Asian country in financial trouble can borrow foreign currency -- usually US dollars -- from another to bolster its international reserves until the crisis passes.
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Asia now holds the bulk of the world's foreign reserves at some $2.7 trillion, led by China which alone has more than one trillion dollars.
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