Repo pacts slower than other steps<\/p>\n
TOKYO (Reuter): Bank Indonesia (central bank) governor
\nSoedradjad Djiwandono said yesterday that Asian central banks had
\nnot used repurchase (repo) agreements to help the Thai central
\nbank because they were slower than other measures.<\/p>\n
He said that he believed that when the Thai government was
\nfaced with a currency shock that combined both economic and
\npolitical factors they had wanted fast measures.<\/p>\n
"So that in the end instead of using repo, they asked for a
\ndirect swap." he told Reuters Financial Television.<\/p>\n
He said that Malaysia, Singapore and Hong Kong in swap
\nactivities had bought baht directly to help the Thai central bank
\nwhen the baht recently came under speculative attack.<\/p>\n
Many Asian central banks have established bilateral repo
\nagreements to provide liquidity in times of currency crisis.<\/p>\n
The pacts give participants access to cash by selling their
\nholdings of U.S. government securities to the pact's partners
\nwith a promise to buy them back later.<\/p>\n
Soedradjad said repo agreements were passed over not because
\nthe problem was too big but because repo pacts were just one
\nbasis for central bank cooperation.<\/p>\n
"The repo itself (was) just the impetus to show the world that
\nwe are working together," he said.<\/p>\n
Asked if a yen-denominated agreement would be more readily
\nused, Soedradjad said there had been some discussion about it but
\nthat it was up to the participating countries and the Bank of
\nJapan.<\/p>\n
Most central banks in Asia were increasing their holdings of
\nyen, he said, adding that Indonesia had 35 percent of its
\nreserves in yen, partly because the proportion of its government
\ndebt denominated in yen was high.<\/p>\n
He said a yen-denominated pact was not too difficult
\ntechnically but that other countries' holdings were not as high
\nas Indonesia's.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/repo-pacts-slower-than-other-steps-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}