China, S'pore central banks seek cooperation

China, S'pore central banks seek cooperation

Dow Jones, Denpasar

Chinese central bank Governor Zhou Xiaochuan met with the managing director of the Monetary Authority of Singapore, Heng Swee Keat, on Sunday to discuss economic and financial cooperation between the two central banks.

Zhou said that they did not discuss the possibility of China adopting a foreign exchange regime similar to Singapore's model, as some recent media reports had speculated.

"We didn't talk about that," Zhou said at a central bankers conference on the Indonesian resort island of Bali. "I think China is studying our own reform, our way, but certainly we know that there are different schemes to undertake reform."

Singapore's central bank manages the value of the Singapore dollar against a basket of currencies of its major trading partners. In China's foreign exchange system, the yuan trades within a narrow band around 8.28 yuan to the dollar. The U.S. and other countries have been pressuring China to loosen its tightly managed peg, arguing the Chinese currency is undervalued.

"I think the size of the (China's) economy, the stage of the development is different from Singapore," Zhou said after a one- hour meeting with Singapore's Heng.

Asked if China's central bank, the People's Bank of China, is looking for different options in managing exchange rates, Zhou said that the bank is studying all options.

But he was quick to add that "it's a very general study, there's not any news about the (China's) exchange rate policy."

Zhou met Heng after they attended a one-day meeting of 11 central banks' chiefs from East Asia and Pacific on Saturday on the resort island.

Heng declined to give any comment after the two central banks met.