THE ASIAN DEVELOPMENT Bank has just published a big study on currency co-operation in Asia, one that tells me it is time for Hong Kong to distance itself as far as it can from the ADB. It is such an enormous study that the ADB has had to publish it as a book. I have not read it and I do not intend to. The gist of it is obvious, anyway, from the press reports about it. The ADB, an institution that has long passed its sell-by date but still provides its employees such a high life in Manila that they will never consider taking themselves of the shelf, wants Asian central banks to co-operate in an eventual drive for monetary union. It is an unchanging message from this unchanging dinosaur and what immediately strikes a false note about it is another story we published yesterday in the business section, reporting massive intervention by Japan's central bank in foreign exchange markets to stop the yen from rising further against the US dollar. This effort has now pushed Japan's foreign reserves to an astounding US$626 billion and Japan is not the only one to play this silly game. Total foreign reserves across East Asia have now topped the US$1.7 trillion mark, double what they were four years ago. What we have here is Asian central banks doing all they can to defy market forces and keep their currencies artificially weak against the dollar. The only thing that has changed from the thinking that produced the Asian financial crisis in 1997/98 is that this time the central banks want weakness while in the lead-up to the 1997 debacle they wanted strength. Either way they want control. And this is the big problem with reaching monetary co-operation. Any country that allows money flows across its borders faces a stark choice. If it chooses to control its currency it must let the market establish that currency's interest rates and if it chooses to control interest rates it must let the market establish the currency's exchange rate. But if it wants to control both it is asking for eventual trouble, the sort of trouble that led to the financial crisis in 1997. This column does not have enough space to go into all the details of why things must be that way but ask any economist and you will be told it is so. Asian central banks still want it both ways, however. In short, they have not even grown up enough to manage their own national monetary affairs. There is no comparison to be made here with Europe. Asia is still light years away from an Asian equivalent of the euro and receding from it, not advancing towards it. When Asian central banks talk of co-operation, what they actually mean is helping each other to rig their currencies in defiance of market forces so that they can continue to lord it over both exchange rates and domestic interest rates. But there is one monetary jurisdiction in Asia that does not do this - ours. We faced that stark choice and settled on one of the two alternatives. We fixed our exchange rate to the US dollar and let the market establish our interest rates. It is a mechanism called a currency board system. We call it the peg. And the danger we now face is that the Hong Kong Monetary Authority will be sweet-talked into helping other central banks evade the stark choice. It has already done so in a small way but the pressure from other central banks at their regular talking shops will not let up. They want more. They want Hong Kong to put the proceeds of monetary responsibility at risk for them so that they can be irresponsible. Tell them to get lost next time, Joe. We cannot take Hong Kong out of Asia but this is no reason why we should participate in this nonsense. Keep this ADB twaddle well away from us, please. I AM STILL waiting to hear an answer to a question I posed to InvestHK chief Mike Rowse in this column yesterday. Who has the rights to this big video of Harbour Fest, Mike? If, as you say, the whole point of guaranteeing HK$100 million to stage Harbour Fest was to produce this video, then we should own it, should we not? Do we?