U.S. optimistic on financial services accord

U.S. optimistic on financial services accord

JAKARTA (JP): A senior United States Treasury official told a
group of panelists here yesterday that he is confident a global
financial service deal will be concluded by June 30 despite the
recent Mexican crisis and the falling dollar.

"I do not believe that Mexico's financial problems should be a
reason for countries to hold back on reaching an agreement on the
opening of financial services," said Jefferey Schafer, addressing
a group of panelists about the trade of financial services set up
under the new World Trade Organization.

The panel talk was held by Worldnet and the United States
Information Service at the U.S. embassy here yesterday.

The area of financial services -- including banking and
insurance -- was set aside at the end of the seven-year Uruguay
Round negotiations last year.

Last month the United States pledged to give equal treatment
to all signatories on the General Agreement on Tariffs and Trade
provided they make substantial commitments to opening up their
financial services sector to outside competition.

Looking back at the Mexican crisis in January, Schafer
suggested that the Mexico could have avoided the problem had
there been a greater presence of foreign banks injecting more
capital into the economy.

"Remember, the goal of this accord is to create a strong
network of global financial institutions," he said.

Currency

The official, however, refused to discuss the impact that the
slipping U.S. currency against the Japanese yen and German
Deutsche mark might have on reaching the accord by its deadline
of June 30.

Market reports from London and Tokyo yesterday said that the
dollar steadied nervously in European trade after plunging to a
new post-war low against the yen in the Far East.

Dollar buying by the U.S. Federal Reserve, the German
Bundesbank and the Bank of Japan earlier this week proved largely
ineffective.

The dollar was trading at around 84 yen in mid-morning, above
a fresh 83.65 yen low seen overnight. Against the mark it climbed
to 1.3770 from 1.3730 late on Thursday.

"I could repeat what Treasury Secretary Robert Rubin said
recently: a strong dollar will benefit the U.S. economy and the
Treasury will only intervene if it makes sense," he said.

Schafer also said that once the June 30 deadline is passed,
the U.S. will be "interested" in setting further deadlines to
implement concrete measures to open the trade of financial
services.

Such datelines, he said, would be "negotiable and discussed on
a country by country basis as long as there is a clear commitment
in opening up markets."

One example of U.S. concern with Indonesia's commitment to a
more open sector is the regulation that requires foreign banks to
have higher capital than domestic banks, he said.

"Sure it does not keep everybody out but it is a concern," he
said.

Three leading U.S. investment banks deciding recently to
establish a presence here are Salomon Brothers, Goldman Sachs and
Merrill Lynch. (hdj)