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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