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.