World's central banks must improve ties, says UK banker

World's central banks must improve ties, says UK banker

JAKARTA (JP): The most senior Bank of England member to visit
Indonesia in decades stressed yesterday the need for the world's
central banks to improve ties.

The deputy governor of Britain's central bank, Howard Davies,
said banks and finance ministries needed to cooperate more to
prevent repeats of the Barings collapse and catch rogue traders
like Sumitomo Corp's copper dealer Yasuo Hamanaka.

He said "one of the major lessons of the Barings collapse is
that we need to build relationships with all central banks and
finance ministries so that we know each other well enough to
explain emerging problems to each other and prevent future
collapses.

"The nature of these markets is such that there are strong
incentives for people to try and make money for themselves, this
is human nature. The banks' task is to make sure that those
people are surrounded by controls that pick up quickly what they
are doing."

Davies said Indonesia had been strengthening its banking
system controls but said there was still room for improvement.

"I don't want to sound alarmist but equally I'm determined not
to sound complacent," he said.

"However, that's also the case in London and everywhere. It's
a constant process of upgrading networks of information and
understanding risk".

Davies, here on a two-day visit, predicted all Southeast Asian
financial markets would keep growing but said no city would
dominate the region.

"I think there will be a number of competing centers and on
the whole that is good because competition means more
deregulation, more flexibility and more innovation." (jea)