Asian giants talk of fair deal, single currency

The meeting of the finance ministers of China, Japan and Korea on the sidelines of the Asian Development Bank annual meeting here today called for a fair representation of countries like them in the Asia region in the international financial institutions (IFIs) and a hike in the ad hoc quota of the International Monetary Fund (IMF).

The ministers also decided to look at the idea of regional currency units, a first step on the long road to an Asian Euro.

Calling for strengthening of a regional scheme to prevent currency turmoil and for the development of immature bond markets in Asia, a joint statement said: "We noted the importance of sharing our long-term vision for financial integration in the region. We agreed on further study of related issues, including the usefulness of regional currency units, through the ASEAN+3 finance ministers' process."

ASEAN+3 includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam, China, Japan and South Korea.

A plan by the ADB for several types of theoretical Asian currency units (ACUs) has not gone far, with some Asian countries doubtful that the bank was the right body to explore the idea.

Given the political sensitivities involved, the ADB had recently stressed that an ACU, which would be made up of a basket of currencies, would not be traded and would simply be an indicator of the stability of participating currencies.

Delivering the joint message, Japanese Finance Minister Sadakazu Tanigaki said: "We acknowledge the importance of addressing the issue of significant under-representation of the countries whose current economic strength and relative position in the global economy are not properly reflected in the IFIs."

The joint statement also emphasised the importance of an increase in the ad hoc quota in the IMF, and called upon its managing director to work with the International Monetary and Financial Committee and executive board to come forward with concrete proposals for agreement at the next IMF and World Bank annual meetings in Singapore. "On our side, we will strengthen our participation in IMF activities," the statement said.

It was pointed out that soaring oil prices and the upward trend of interest rates might pose a threat to the regional economies even as the three countries' growth for 2006 remained positive on account of strong demand in the region and continued robust growth of the world economy.

"Markets have misunderstood our previous meeting. We never meant to say that depreciation of the dollar against Asian currencies is inevitable," he said, adding that the movement had been noted in exchange rates and needed careful monitoring.

The minister said the ongoing efforts for closer financial cooperation among the three countries would ensure greater financial stability in the region. "Regional financial cooperations stemmed from Asian financial crises. We have a greater role to play in this region," Tanigaki added.

Besides discussing the ways to improve their representation in IFIs, the meeting also exchanged views on the regional economic prospects and regional financial cooperation.

The meeting also agreed to make continuous efforts to seek the possibility to further enhance the regional financial cooperation.

"We also reaffirmed our strong commitment to promote other regional cooperation projects such as Asian bond markets initiative."