|
Olarn: Yuan and yen deserve bigger role
Asia needs buffer from currency swings
Bangkok Post – 3 November 2008
SOMRUEDI BANCHONGDUANG AND WICHIT CHANTANUSORNSIRI
The Chinese yuan, together with the Japanese yen, should be promoted as key currencies in the region to help buffer Asia from market volatility in the Western economies, according to deputy premier Olarn Chaipravat.
At the same time, Asian economies should co-operate and establish reserve pools and sovereign wealth funds to support market development and reduce the region's dependence on the West.
Dr Olarn, speaking on Friday to bankers at the 27th Asian Pacific Bankers Council in Bangkok, said Asian financial integration was critical to help mitigate the impact on the region of future crises.
Asean members plus Korea, Japan and China are already working toward greater policy co-ordination and market co-operation and integration under a proposal to create an Asian Financial Community within the next decade.
Regional leaders last month in Beijing discussed plans to establish a reserve pool as large as $350 billion as well as other funds to help develop Asian fixed-income and equities markets.
Finance ministers of the Asean+3 grouping will discuss the proposals at a two-day meeting next week in Manila as well as at the Asean Summit in mid-December in Chiang Mai.
Kanawat Wasinsungworn, secretary to finance minister Suchart Thada-Thamrongvech, said the proposals represented an "Asian New Deal" for the region in terms of market development.
He said Thailand's proposals centred on three concepts.
The first would nearly double existing multilateral swap arrangements among the Asean+3 members under the so-called Chiang Mai Initiative to $150 billion as an emergency pool to meet short-term liquidity demand. A new secretariat would be created to help manage the reserve funds.
The second proposal would create a sovereign wealth fund financed by regional economies to invest in Asian debt and stock markets. The fund, which could be worth as much as $350 billion, would also participate in financing large infrastructure projects in the region.
A third fund would be a foreign-reserve pool of up to $350 billion, or just 10% of existing foreign reserves held by Asian economies. Contributions would be set among the different Asian countries based on their existing reserves and gross domestic product.
Mr Kanawat said the concepts would strengthen the region's financial infrastructure as well as reduce dependence on currencies such as the dollar and euro, both of which are likely to fall over the medium term due to problems facing the US and European economies.
|
