Former finance minister Manmohan Singh has suggested the setting up of an `international safety net to rescue countries which faced hardships for reasons beyond their control.
Singh was addressing a symposium organised to celebrate the 50th anniversary of the United Nations Economic and Social Commission for Asia and the Pacific (Escap) in Shanghai on Tuesday.
Developing countries will need new techniques of risk management in dealing with new uncertainties like the volatility of exchange rates and interest rates, Singh said, adding that the establishment of an international safety net, with sizable resources at its disposal, would ensure that these countries could meet the challenges ahead in a world of integrated trade money and capital markets.
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He said financial markets and banking systems in several Asian countries required reforms to make them resilient.
An international safety net was essential to deal with situations like a sudden capital outflow brought about by an unexpected shift in monetary policy of a country like the US, he said.
The safety net should also cover contingencies such as another oil shock or a major harvest failure, Singh added.
Singh said countries of the Escap region need effective regional fora for regular exchange of information and for a policy dialogue, and for working out mutual assistance packages.
The purpose of these regional arrangements, Singh said, should be to assist member countries through the pursuit of outward oriented and market friendly policies to take full advantage of the opportunities offered by the globalised world.
Exchange of information about problems of macro economic management, environment-friendly policies, human resource development strategies and issues related to the creation of social safety nets could form the basis of this regular periodic dialogue I have in mind, Singh said.
He said the `late comers in the race for economic development could also use the regional fora to gain the experience of successful development in Japan, China and other countries of east and south-east Asia, in working out the design of new policies suited to their needs.
Successful regional cooperation can greatly reinforce the capacity to promote a people-generated development with its twin commitments to the pursuit of both excellence and social equity, Singh said.
He said that the Asia-Pacific region is now blessed with a vast pool of savings, technological capabilities and large markets. Purposeful regional cooperation could harness these assets to the mutual advantage of this region as well as the outside world, he said.