United States investment bank Salomon Smith Barney has called on ailing Asian economies to pass responsibility for supervising international capital flows to Group of Seven (G7) leading industrialised nations' financial regulators.
Global head of sovereign research Stephen Taran said regulatory authorities in Asia lacked the expertise and 'institutional capacity' to effectively monitor flows into and out of the region.
Countries in the region would also be preoccupied with the recovery of their economies, hampering efforts to accurately record capital movements.
The rapid and unregulated flow of funds has been blamed for deepening the regional crisis and has become a source of prime concern for international bodies such as the World Bank and International Monetary Fund.
Mr Taran believed G7 regulators had a greater institutional capacity to control international fund flows.
In October G7 leaders proposed reforms to strengthen the global financial infrastructure, including enhanced hedge fund regulation.
Governments should not seek to regulate hedge funds directly as this was not a feasible way of preventing the region from slipping into crisis again, Mr Taran told the Asia Pacific Issuers and Investors Forum, organised by Euromoney , yesterday.
