'Mr. Yen' stresses need for Asian currency regime
'Mr. Yen' stresses need for Asian currency regime
KUALA LUMPUR (AFP): Eisuke Sakakibara, the man once known as
"Mr. Yen" for his sway over financial markets, has called for an
Asian currency regime to be developed to stabilize exchange rates
in the region.
Sakakibara, Japanese vice finance minister until September
last year and now a professor at Keio University, said in remarks
published on Wednesday that Asian countries were currently
operating based on the U.S. dollar.
"We need a cooperative regime among Asian currencies --
ringgit/yen, won/yen and yen/baht and so on," he said in an
interview with the New Straits Times daily newspaper.
"It may take time but it is absolutely necessary at least in
the medium term. Some sort of a unification of currencies might
be difficult but we could start with something like an Asian
currency unit."
Sakakibara said Japan was slowly recovering after the economy
hit bottom in the first quarter of 1998 but it needed to
stabilize the yen/dollar rate.
"There is need for joint intervention by the U.S. and Japan to
stabilize the currencies. Further appreciation of the yen, seen
from the reverse side, is a weakening of the dollar," he said.
"I don't think (a weak dollar) is desirable for the U.S.
because it is receiving a huge amount of money from the rest of
the world. It needs US$1 billion a day in order to compensate for
its current account deficit."
He said that there were already "some bubble elements" in the
U.S. stock market.
"If the bubble bursts, that would really affect the world
economy negatively and we have to avoid that. There is a need for
a stable exchange rate," he added.
Sakakibara, who is being backed in Japan as a candidate to
succeed current IMF managing-director Michel Camdessus who steps
down in February, also called for a regional defense mechanism to
cope with future crises.
He said the IMF had made several crucial mistakes in early
stages of the Asian economic turmoil, which began in mid-1997,
and "in some cases, precipitated the crisis rather than halting
the crisis."
"I don't think it is possible to really stop the occurrence of
future crises," he said.
But a strong national supervisory authority, high foreign
reserves, and contingent arrangements with the private sector and
across the region would forestall any crisis, he added.
The retired bureaucrat said he expected China, South Korea,
Malaysia, Indonesia and eventually India to play a key role in
the region in the new century.
He said China's entry into the World Trade Organization was a
sign that the country was "deregulating its market in a cautious
way" with a gradual transformation of its economy.