ADB stresses fund for Asia

Ulhas Joglekar ulhasj at
Fri Mar 17 16:17:26 PST 2000

Saturday 18 March 2000

ADB stresses fund for Asia MANILA: The Asian Development Bank said Friday there is a need to seriously consider setting up an Asian Monetary Fund for the region. In a report on the financial-market challenges Asia faces, the Manila-based development bank said the establishment of an Asian Monetary Fund could promote self-help within the region, address regional development issues and boost confidence in crisis-affected countries. Although the report was compiled last year, its release comes amid a growing debate on the role of multilateral banks, and specifically whether the World Bank should pull out of Asia and let the ADB be the main agency providing developing countries in the region with loans to alleviate poverty. The ADB said other regional efforts that should be considered to prevent a recurrence of Asia's 1997-1998 crisis include establishment of regional funding and guarantee facilities, and a regional exchange-rate stabilization fund aimed at damping the effects of currency contagion. The ADB noted that the International Finance Corp., the investment arm of the World Bank, has set up a fund to invest in distressed Asian companies, and the ADB itself has established a $3 billion Asian Currency Crisis Support Facility financed by the Japanese government under the $30 billion Miyazawa Fund. The Miyazawa Fund was established to help crisis-hit Asian countries recover, while the ACCSF, which became operational last April, provides loan guarantees and interest-payment support. Other regional efforts include the setting up of a regional surveillance system within Southeast Asia to spot economic problems in each country. But despite these measures, more needs to be done, the ADB report concluded. The notion of an Asian Monetary Fund has sporadically surfaced since the outbreak of the currency crisis, despite stiff opposition from the United States and other Western governments. At a meeting of the Association of Southeast Asian Nations in Manila last November, the 10-member group called on Japan to make the Miyazawa Fund a permanent facility, a move that showed that the region was becoming more assertive in handling its financial problems - and wants to be more independent of the IMF. Should the plan get off the ground, it would likely boost Japan's influence in Asia at the expense of the IMF, perceived by some Asian officials as an arm of U.S. policy. While Japan and the United States have equal stakes of just over 16 per cent each in the ADB's capital stock, a Japanese has always been president of the bank since it was founded in 1966. (AP) For reprint rights: Times Syndication Service
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