Repo pacts slower than other steps

Repo pacts slower than other steps

TOKYO (Reuter): Bank Indonesia (central bank) governor
Soedradjad Djiwandono said yesterday that Asian central banks had
not used repurchase (repo) agreements to help the Thai central
bank because they were slower than other measures.

He said that he believed that when the Thai government was
faced with a currency shock that combined both economic and
political factors they had wanted fast measures.

"So that in the end instead of using repo, they asked for a
direct swap." he told Reuters Financial Television.

He said that Malaysia, Singapore and Hong Kong in swap
activities had bought baht directly to help the Thai central bank
when the baht recently came under speculative attack.

Many Asian central banks have established bilateral repo
agreements to provide liquidity in times of currency crisis.

The pacts give participants access to cash by selling their
holdings of U.S. government securities to the pact's partners
with a promise to buy them back later.

Soedradjad said repo agreements were passed over not because
the problem was too big but because repo pacts were just one
basis for central bank cooperation.

"The repo itself (was) just the impetus to show the world that
we are working together," he said.

Asked if a yen-denominated agreement would be more readily
used, Soedradjad said there had been some discussion about it but
that it was up to the participating countries and the Bank of
Japan.

Most central banks in Asia were increasing their holdings of
yen, he said, adding that Indonesia had 35 percent of its
reserves in yen, partly because the proportion of its government
debt denominated in yen was high.

He said a yen-denominated pact was not too difficult
technically but that other countries' holdings were not as high
as Indonesia's.