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 10 Oct 2008

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Asean Finance Ministers Meeting
Global credit crisis may hit growth, not banks

Economic growth in Asia will suffer from the global financial crisis but banks are not at risk and no region-wide measures are necessary to stave off any systemic threats, Reuters quoted Southeast Asian finance ministers as saying Wednesday.

Ministers from the Association of Southeast Asian Nations (Asean), meeting in Dubai, underlined the region's banking systems were resilient and economic fundamentals sound.

"The banking and financial systems are not facing a crisis of systemic confidence. We are not facing the sorts of problems as in other parts of the world that require a systemic response," Singapore finance chief Tharman Shanmugaratnam said in a joint statement for the group.

"We are not pretending that we are not going to be affected by this (but) we are assured that there has not been a loss of confidence in the banking system, certainly not on a systemic scale."

Central banks around the world cut interest rates on Wednesday to try to limit economic damage from the worst financial crisis in 80 years.

The Federal Reserve said it was cutting its key federal funds rate by 50 basis points to 1.5 percent. China, the European Central Bank and central banks in Britain, Canada, Sweden and Switzerland also cut rates in a coordinated response which investors had been demanding.

Malaysia's Second Finance Minister Nor Mohamed Yakcop said the ASEAN countries would be burdened by the crises in Europe and the United States but not to the point of recession.

"We will not be going into a recession," he said. "We don't have a banking crisis."

Asian stocks tumbled, however, as fears over the financial crisis hit investor sentiment and Indonesia suspended trading on its bourse after the index fell by its 10-percent limit.

Indonesian finance minister Sri Mulyani Indrawati told reporters after the meeting that some small banks or banks with liquidity should be supported through the pressure but in a way that does not create systemic problems.

Thailand's secretary for finance, Suparut Kawatkul, said his country planned to proceed with plans to remove state guarantees on bank deposits in 2009.

"We have enacted a new law on this, and this year will be the last year that we guarantee bank deposits in full and from next year onwards we will lower the level," he said. "We will go ahead as scheduled in the law," he said.
































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