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)
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