ASEAN KEY DESTINATIONS
ASEAN central banks need to be ‘proactive’: expert
CENTRAL banks in the region are urged to be proactive during period of financial turbulence to cushion its impact on the country’s economy.
“There could always be periods of turbulence but if you are more proactive, you can dampen those periods of turbulence and make sure that the economy remains stable,” said Michael Joseph Zamorski, advisor for financial stability and supervision at the Kuala Lumpur-based South East Asian Central Banks Research and Training Centre (SEACEN).
It’s a stable economy, Zamorski said, that allows banks to keep serving their customers.
He said this is especially true with the banks’ clients who are mostly small business owners and small businesses drive economic growth over long term.
Zamorski is currently in Brunei to lead a five-day foundational course on risk based supervision.
In an interview held at the sidelines of the workshop, Zamorski told The Brunei Times that banks in Southeast Asia have been “very fortunate” not to have experienced any crisis since the 1997 Asian financial meltdown.
He said bank supervisors have finite resources which means they would have to allocate these resources intelligently.
He also said one of the key lessons learned from the 2007 global economic meltdown and the Eurozone debt crisis is that people, including regulators, don’t fully understand new banking products and its risks.
“And by the time they did, some of the damage was done,” he said.
Regulators and monetary authorities need to introduce a mechanism that will allow them to efficiently understand these products.
“Credit risk lending is always going to be the number one risk for banks,” he said.
Zamorski said this is more crucial in Asia Pacific where the banking sector, and not the capital markets, provides most of the credit.
The five-day foundational course on risk based supervision, which ends tomorrow, aims to help participants identify factors that would weaken the financial sectors as well as the risks that may arise from these weaknesses.
The course is organised by the Autoriti Monetari Brunei Darussalam in collaboration with SEACEN.
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