Asian central banks welcome BIS invitations

Asian central banks welcome BIS invitations

SINGAPORE (Reuter): Asian central banks welcomed yesterday
their invitations to join the Bank for International Settlements
(BIS), although economists said monetary policy in the new member
countries would not be affected.

The Monetary Authority of Singapore (MAS) said it was pleased
to accept the BIS' invitation and its membership would enable it
"to play a more active role in promoting cooperation among
central banks...to enhance the stability of international
financial markets".

Nine new members were invited into the Basle-based BIS on
Monday. They were Singapore, China, Hong Kong, India, South
Korea, Russia, Saudi Arabia, Brazil and Mexico.

However, one chief economist at a European brokerage house
here commented; "The BIS is a prestigious organization which has
done a lot of good, but don't look out for any near-term impact
on monetary policy in new member countries. It won't happen."

An economist at a U.S. investment bank agreed and noted the
BIS was basically a center for cooperation and the nine new
members would not change its decision-making structure.

BIS decisions are made by a board of directors consisting of
the Group of 10 industrialized nations -- the United States,
Canada, Japan, Germany, France, Britain, Italy, Belgium, the
Netherlands, Sweden and Switzerland.

But the economist said the new members would help improve
Asia's representation in the BIS. At present, only two of Asia's
booming economies are represented, Japan and Australia.

The addition of five further Asian countries to the BIS to
give the central banks' banker a more global role was largely
predicted by retiring Reserve Bank of Australia governor Bernie
Fraser in a speech last month.

In his speech on regional central bank cooperation, Fraser
called the BIS European-focused and said he would not be
surprised to see an Asian equivalent of the Bank in three to five
years.

He said an Asian BIS would be particularly important to
smaller countries in times of crisis, when they tended to receive
less priority from multilateral bodies such as the International
Monetary Fund and the BIS.

He also said if additional members from the region were
invited to join "it would increase Asia's representation on the
BIS share register, although I am not sure it would do a lot more
than that, at least in the short term."

The economist at the U.S. investment house said he was
intrigued by the invitations to both the Hong Kong Monetary
Authority (HKMA) and the People's Bank of China (PBOC) so close
to Hong Kong's return to China at the end of June, 1997.

"A big vote for 'one country, two systems'," he said.

HKMA chief executive Joseph Yam agreed.

"This goes to show that the international financial community
is fully supportive of the 'one country, two systems' policy
enshrined in the Basic Law," he said of Hong Kong's post-1997
constitution.
T he Bank of Korea director Choi Sung-hwan said membership would
be useful if South Korea needed an international bail-out.

It would also be a useful source of help for a raft of
monetary issues raised by membership of the Organization for
Economic Cooperation and Development (OECD). South Korea is
pressing to join the Paris-based club of rich nations this year.

He said South Korea had informed the BIS verbally it would
apply to subscribe to BIS shares.

Choi said he expected no direct impact on local banks.