ASEAN agrees to consider plan on regional currencies in trade
ASEAN agrees to consider plan on regional currencies in trade
BALI (AFP): Central bank governors from five key Southeast
Asian economies agreed here Saturday to form a task force to
study the potential use of their currencies in intra-regional
trade settlements.
A statement said central bank chiefs from Indonesia, Malaysia,
the Philippines, Singapore and Thailand met informally, on the
fringes of an annual conference of Southeast Asian monetary
authorities, to discuss the proposal.
"In particular, the meeting explored alternative mechanisms to
achieve this objective," the statement said.
"The meeting agreed to set up a technical task force to study
the feasibility of alternative mechanisms and assess their
potential benefits and costs, with a view to making a
recommendation on their adoption and implementation," it added.
The task force is expected to meet in Kuala Lumpur at the end
of this month.
The five countries studying the proposal are the leading
economies in the Association of Southeast Asian Nations (ASEAN),
which also includes Brunei, Laos, Myanmar and Vietnam.
The five have been hit hard by the sharp fall of their
currencies against the U.S. dollar since mid-1997 and have been
seeking ways of stabilizing their currencies and easing their
dependence on the greenback.
The discussions took place on the sidelines of the 33rd
Conference of the Governors of Southeast Asian Central Banks
(SEACEN) in this Indonesian resort.
On Friday, the governors urged the Group of Seven (G-7)
industrial nations to help their countries overcome financial
turmoil as most regional currencies were hit by fresh weakness.
G-7 finance ministers and central bankers are to meet in
London on Feb. 21 with the Asian crisis expected to be high on
the agenda. The group comprises the United States, Japan,
Germany, France, Canada, Italy and Britain.
Malaysian Prime Minister Mahathir Mohamad, the strongest
proponent of trade using regional currencies, said in an
interview published Saturday in Singapore that Malaysia and
Singapore were discussing enhancement of bilateral payment
arrangements, and other ideas were being explored in the region.
"We have experience in this because we have been trading with
a lot of countries in the South through this bilateral payments
arrangement," he said, using a generic term for developing
nations.
One proposal calls for using the Singapore dollar as the main
medium of ASEAN trade, but the city-state has balked at the idea.
Singapore's Finance Minister Richard Hu said Friday that "I
don't think it's realistic because we are a small economy."
"There aren't enough Singapore dollars to go around," he said.
Singapore has opposed the rapid internationalization of its
currency, which would make it more vulnerable to global market
forces.
The Singapore dollar has eased since mid-1997 against the U.S.
dollar but gained against the currencies of its neighbors, thanks
to the city-state's strong fundamentals and safe-haven image.