Support unit for Asean
FINANCIAL TURMOIL
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SENIOR Asean officials yesterday agreed to set up a permanent secretariat to provide technical and analytical support for a “surveillance mechanism” to help prevent a recurrence of the monetary turmoil that has hit the region.
The secretariat will be at the Manila-based Asian Development Bank.
Sources involved in the preparatory talks ahead of the Asean Finance Ministers meeting here today, said the officials had reached a consensus to set up the system to spot potential risks before they spark a financial crisis.
They said it would be implemented once ministerial approval was obtained.
“When this scheme is in place, countries will get together regularly to discuss each others economic development and policies,” a senior official told The Straits Times.
“It is a form of peer pressure to get neighbouring countries to follow proper economic policies. We hope this will minimise the risk of problems arising.”
The source said officials had drawn up various types of surveillance plans for the ministers to consider. These included a central bank forum, where the region’s various national banks would meet twice a year to discuss macroeconomic policies and be assisted by the International Monetary Fund.
The chairmanship of a select committee to oversee the mechanism would also be rotated every year to involve all Asean countries.
The move takes place against a backdrop of the currency crisis which has ravaged the region’s economies over the last six months, in particular forcing drastic depreciations of the Indonesian rupiah, Thai baht and Malaysian ringgit against the US dollar.
Officials also said Asean finance ministers were likely to discuss a proposal to use currencies from member nations for trade within the group. Central bank governors from five Asean countries met recently in Bali to form a task force to study the use of their currencies for intra-regional trade.
Reports said one proposal was for central banks in the region to act as clearing houses for trade payments.
Sources also disclosed that in the wake of the crisis, Asean finance ministers were likely to make an appeal to the Group of Seven nations to help countries like Indonesia avert food shortages.
The economic crisis has hit countries like Indonesia badly, with social repercussions. Soaring food prices and shortages of basic goods have caused unrest in more than 25 towns across the country.
