Asian central banks to boost cooperation

Asian central banks to boost cooperation

SHANGHAI (Reuter): Asian central bankers wound up their
meeting in Shanghai yesterday with a pledge to strengthen
cooperation to assist members in making economic adjustments.

The 11 members of the group said in a statement the central
bank governors would direct their deputies to work with domestic
authorities and the International Monetary Fund to study
arrangements for facilities to assist member states to implement
adjustment programs when necessary.

The central bank governors attending the meeting reviewed
recent developments in currency markets in the region and noted
that economic fundamentals of their economies remained sound, the
statement said.

"However, excessive volatility in the currency markets could
affect the maintenance of monetary and financial stability
amongst (member economies)," it said.

"Governors recognized the importance of stability of foreign
exchange markets, which should reflect fundamentals, and in this
regard the governors commended the significant adjustment made by
the region's economies," it said.

They noted that asset price bubbles could have a significant
impact on economic activity, the health of the financial system
and inflation, the statement said.

"Accordingly, developments in asset prices deserve careful
attention," it said. "In order to contain asset price inflation,
stable monetary conditions and effective banking supervision
should be maintained."

The conference of the Executives' Meeting of East Asia and
Pacific Central Banks followed weeks of speculative attacks on
several Asian currencies, most notably the Thai baht, which has
lost about 20 percent since it was allowed to float on July 2.

Chinese central bank vice governor Chen Yuan later told
reporters he had no details on the possible facilities that could
be implemented to assist member countries.

Chen also noted that the Asia-Pacific grouping was a forum for
discussion and did not have mechanisms to institute any such
arrangements at present.

"The People's Bank of China supports the currency stability of
this region," he said. "It is the general stance of our bank to
show our cooperation."

The central bankers' statement said the governors also reached
a consensus on the operation of what they called a virtual
secretariat whereby members would be connected through an
electronic network to share information.

Chen said no date had been set for the creation of this
virtual secretariat but he said it would be very soon.

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