Quietly, however, Asia is promoting a raft of sensible and practical measures that assist the development of regional capital markets without all the pain and inflexibility of a common currency.
At last month’s Asian Development Bank meeting in Istanbul, the finance ministers of the ASEAN (Association of Southeast Asian Nations) plus three (China, Japan and Korea) agreed to strengthen the Chiang Mai Initiative that governs swap arrangements between the central banks.
In effect, a series of bilateral swap arrangements is being turned into a multilateral arrangement that would be automatically triggered in the event of an emergency.
The ASEAN plus three grouping also had something to say about regional bond markets and the vexed question of IMF quotas. The issuance of Asian-currency basket bonds is to be explored as part of the Asian Bond Markets Initiative, as are the practical alternatives for withholding tax treatment, the disparities in which hold back cross-border trading.
On IMF quotas, which determine a country’s access to financing, Singapore’s second minister for finance, Raymond Lim Siang Keat, said: “The last review was in 1998. Since then the Asian economies have recovered and stabilised and are playing an important role in the world economy. Asian economies are under-represented in the IMF and a review is in order.”
