Use of ASEAN monies not viable: RP official<\/p>\n
MANILA (AP): A proposal to use local currencies instead of
\nU.S. dollars in trading within Southeast Asia is not viable, a
\nPhilippine official said Tuesday.<\/p>\n
Officials in the Association of Southeast Asian Nations have
\nproposed the scheme as a way to lessen the region's reliance on
\nU.S. dollars and strengthen its economic and financial
\nintegration.<\/p>\n
Economic Planning Secretary Felipe Medalla said Southeast
\nAsian governments could establish procedures for using regional
\ncurrencies, but the process would be too cumbersome and would not
\nbe viable in the long run.<\/p>\n
He said businessmen would prefer dollars because they are
\neasier to convert and not likely to lose value rapidly.<\/p>\n
Medalla compared holding a regional currency to owning an
\nexpensive painting.<\/p>\n
\"If you have two months to sell it you're OK, but if you are
\nforced to sell it today because your kid is in the hospital,
\nyou're likely to lose a lot,\" he said.<\/p>\n
He said central banks in the region would have to maintain
\nsubstantial reserves of ASEAN currencies to make trading with
\nthose currencies viable. However, doing so would be risky because
\nthe currencies could lose their value and result in huge losses.<\/p>\n
In the case of the Philippines, the peso can be readily
\nswapped with the dollar because it is traded in large volumes on
\nthe foreign exchange market, Medalla said.<\/p>\n
A leading Filipino businessman, Jose Concepcion, said recently
\nthat the Philippines, Thailand, Indonesia, Malaysia, Singapore
\nand Brunei plan to have a framework ready for bilateral trade
\npayments using local currencies by the end of the second quarter
\nof 1999.<\/p>\n
Concepcion, who heads a committee representing ASEAN's
\nchambers of commerce and industry, said the less developed
\nmembers of ASEAN - Myanmar, Laos and Vietnam - are not expected
\nto participate in the scheme for some time.<\/p>\n
Medalla said he was aware the Philippines is supporting the
\nscheme and said he has told other Philippine economic officials
\nthat it is not viable.<\/p>\n
In a report to ASEAN trade ministers who met recently in
\nManila, ASEAN secretary-general Rodolfo Severino said the group
\nrecognized the initiative isn't a \"cure-all\" for the continued
\nvolatility of regional currencies.<\/p>\n
But he said there was good reason to hope the bilateral
\npayments would help, given the magnitude of intra-ASEAN trade,
\nwhich totaled US$86 billion in 1997.<\/p>",
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