Asian fund not remedy for currency crisis: LGT

Asian fund not remedy for currency crisis: LGT

SINGAPORE (Reuters): Setting up an Asian fund to help
economies in trouble is not the best solution to the crisis
facing the region's financial markets, LGT Asset Management chief
economist John Greenwood said yesterday.

"I think it's a second best solution," Greenwood told
reporters after addressing a conference in Singapore.

"The first policy is for the ASEAN countries to adopt
appropriate domestic fiscal and monetary policies. Particularly
with the banking system, to ensure sound banking," he said.

ASEAN, the Association of South East Asian Nations, groups the
Singapore, Malaysia, Brunei, Thailand, Indonesia, the
Philippines, Vietnam, Burma and Laos.

"Setting up a fund now, it would not be utilized very
effectively," said Greenwood, the architect of Hong Kong's peg of
its dollar against the U.S. dollar now under attack.

One of the main problem facing such a setup is that the fund
would lack the conditionality that an International Monetary Fund
(IMF) scheme has, Greenwood said.

"Under the IMF lending program, a country is under the
obligation to fulfill the certain conditions. I doubt whether an
APEC fund would have the same kind of conditionality," he said.

APEC, the Asia-Pacific Economic Cooperation forum, groups 18
nations, including the United States and Japan.

"The right way to solve the problem is to solve the cause, not
to set up a fund," Greenwood said.

Finance ministers from Japan and ASEAN will meet in Manila
next month to discuss a proposed Asia fund. No date has been
formally set for the meeting.

There has been strong opposition from most industrial
countries and the IMF to any type of fund which would usurp the
IMF's role or discourage countries in the region from further
economic reforms.