Asian central bankers appear to have taken a significant step towards strengthening co-operation to fend off speculative attacks on their currencies, by agreeing to set up a facility to help troubled countries bolster their economies.
A statement after yesterday's meeting of 11 East Asian and Pacific central bank governors said countries would 'in consultation with the relevant domestic authorities and in co-operation with the International Monetary Fund, study arrangements for facilities to assist members, where necessary, to implement adjustment programmes.' The statement was made by the deputy governor of the People's Bank of China, Chen Yuan, after the second Executives' Meeting of East Asian and Pacific (EMEAP) central banks, at which the region's recent currency turmoil topped the agenda.
Sources close to the talks said the agreement marked a significant step forward, because co-operation between countries would extend further than just supplying each other with liquidity in times of crisis through existing bilateral repurchase agreements.
Meanwhile, in Kuala Lumpur, Association of Southeast Asian Nations (Asean) foreign ministers agreed to intensify co-operation to stabilise exchange rates.
Gabriel Singson, governor of the Philippines central bank, said the five Asean countries party to a currency swap agreement - Singapore, Malaysia, the Philippines, Indonesia and Thailand - were 'supplementing and extending' the agreement.
In Shanghai, Hong Kong Monetary Authority chief executive Joseph Yam Chi-kwong welcomed the proposed credit facility between EMEAP members, saying it would reinforce monetary stability in Hong Kong.