Asian, European finance ministers see economic recovery ahead

Asian, European finance ministers see economic recovery ahead

Leigh Thomas, Agence France-Presse, Copenhagen

Asian and European finance ministers were optimistic Saturday
about a global economic recovery later this year, while backing
closer economic and financial cooperation in Asia for which
European integration could serve as a model.

Ministers and representatives here for the Asia-Europe Meeting
(ASEM) of finance ministers, hosted by Denmark, agreed that a
gradual economic recovery had taken hold and would "accelerate
gradually in the second half of this year", according to a
statement at the end of the meeting.

Danish finance minister Thor Pedersen, whose country took over
the European Union's six-month revolving presidency at the
beginning of the month, told a news conference that Asian
countries would enjoy economic growth rates higher than those
seen in the European Union.

But the pace of reform in the shaky Japanese economy, the
second biggest in the world, remained a source of concern.

The statement said the ministers had urged "the Japanese
authorities to press forward with the implementation of (its
reform) program, in particular with reforms in the financial
sector and in the fiscal and structural fields".

European economic and monetary affairs commissioner Pedro
Solbes explained that economic recovery in Europe would not be
derailed by a weakening dollar, though the U.S. currency's recent
decline in value against the euro could have "a certain impact on
exports in the short term".

But in the medium term a stronger euro was a positive
development, Solbes said.

Denmark's Pedersen, whose country is not part of the euro
zone, explained that with the introduction of the single
currency, Europe had "made a huge leap forward" towards greater
economic, financial and monetary cooperation, noting that
Europe's experiences were a "model for Asia".

"In Asia we have seen the start of cooperation," he said,
although earlier on Saturday European Commission President Romano
Prodi, speaking in Singapore, warned Asia countries that the road
towards a common currency was long and the challenges were
enormous.

However, the finance ministers also said that there was not
only a need for greater cooperation within Asia but also between
Europe and Asia on economic and financial matters.

Better coordination was particularly necessary to prevent
terrorist financing and money laundering.

Pedersen suggested that people involved in large-scale capital
movements ought to be registered in order that authorities can
better track flows of money around the globe.

But greater monitoring of capital flows would not only help to
shut out terrorists and money launderers from the global
financial system, but it would also help avoid financial crises.

The statement said that the ministers had "urged continued
improvements in public disclosures by hedge funds to strengthen
market discipline and reduce systemic risk".

Hedge funds have come under fire recently for their
speculative investments that can cause extreme volatility on
markets.

The meeting, intended to prepare for a fourth ASEM summit, to
be held here in September, was being attended by delegations from
the 15-EU member states and 10 Asian nations as well as by
representatives of the Asian Development Bank, the International
Monetary Fund, the European Central Bank and the European
Commission.