ASEAN bankers seek trade incentives

ASEAN bankers seek trade incentives

MANILA (Reuters): Southeast Asian bankers have urged central banks to provide incentives to encourage the use of regional currencies in cross-border trade.

"Clear incentives should be given to promote the use of ASEAN currencies in trade," the ASEAN Bankers Association said in a statement seen yesterday.

The association groups private bankers from ASEAN -- the Association of Southeast Asian Nations.

ASEAN finance ministers agreed early this year to promote the use of their currencies to ease the dependence on the U.S. dollar.

They are expected to discuss the issue further during a meeting of finance ministers of the Asia-Pacific Economic Cooperation (APEC) forum in Canada later this month.

Among the incentives requested by the bankers include allowing them to use letters of credit denominated in ASEAN currencies to cover their reserve requirements, removal of withholding taxes on interest on cross-border trade financing, and a hedging mechanism.

"In the event that traders prefer the use of the U.S. dollar, a netting mechanism may be used to minimize the volume of foreign exchange transactions, with the central bank acting as a clearing agent," the group added.

ASEAN comprises Myanmar, Thailand, Indonesia, Malaysia, Brunei, the Philippines, Singapore, Vietnam and Laos.