THE Hong Kong Monetary Authority (HKMA) yesterday issued its strongest commitment to protection of the currency against speculators as it signed agreements with four of the region's central banks. The move puts in place another line of defence for four regional currencies against the sort of attack which drove them down last January after the Mexican peso crisis. The agreements follow informal meetings in Hong Kong involving central bankers and monetary authorities from Australia, China, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines and Thailand. HKMA chief executive Joseph Yam said: 'We had a very good discussion on quite a lot of things, basically centring around co-operation in the region - whether there should be greater co-operation and how to achieve greater co-operation.' The authority signed repurchase agreements with the central banks of Malaysia, Thailand, Indonesia and Australia, allowing the banks to provide liquidity on a two-way basis, and predicted that other agreements would be signed between central banks. The repurchase agreements allow borrowers to raise money by selling an asset - in this case, US dollar-denominated debt securities - to raise US dollars on condition that they will buy back the asset at an agreed price and date. Mr Yam said the arrangements increased individual central banks' liquidity by giving them access to cash, while offering the lenders security because there would be no settlement risk. He said the Monetary Authority of Singapore (MAS) had been invited to participate but the notice given of the meeting had been too short. Singapore's Business Times reported yesterday that the MAS had signed a memorandum of understanding with Bank Indonesia for a bilateral repurchase agreement. Earlier in the day, central bankers issued a joint statement saying the latest meeting followed one held in Hong Kong in January to discuss currency speculation in the region. The meeting followed talks in recent years about possible monetary co-operation among the central banks of the Association of Southeast Asian Nations. 'The economies represented at today's meeting have a combined GNP [gross national product] of US$7.36 billion and foreign exchange reserves of $403 billion,' the central bankers said. 'In light of the growing interdependence in trade and investment among these economies, and the globalisation of financial markets, the meeting reaffirmed the importance for the central banks to enhance co-operation to maintain currency stability and improve the integrity and stability of the banking system.' The meeting looked at 'ways to improve co-operation amongst the central banks to deal with volatile capital flows'. Mr Yam said: 'This is just the beginning. There may be other forms of agreement.' These could include banking supervision, development of the region's debt market and the linking up of payment systems on a real-time basis, he said. Asked if he envisaged an Asia-Pacific version of the Bank for International Settlements - the central bank for the world's central bankers - Mr Yam said he did not exclude the possibility of the development of a multilateral facility. Taiwan's central bank had not been invited to attend, he added.