ASEAN KEY DESTINATIONS
Financial cooperation a must for Asean
Financial cooperation will serve as the starting point to deeper market-driven integration of Asian economies, and the focus now should be on regional cooperation to support market integration, trade and investment in the region, according to Bandid Nijathaworn, Thailand's contender for the first directorship of the Asean+3 Macroeconomic Research Office (Amro).
The Chiang Mai Multilateralism Initiative, which was born out of Asean+3 financial cooperation in 2000, would be the key mechanism to serve the trend he said.
Asian economies realized after the 1997 economic crisis they had too little regional cooperation, which compelled them to turn to the International Monetary Fund as a lender of last resort.
Even if regional economies run a surplus on their trade and capital accounts, the initiative means there would be no need for financial aid in the future, he said. It took a decade for the initiative to move from a bilateral to a multilateral basis.
The world economy today is trapped in a quagmire of diverging economic policies resulting from sluggish growth in advanced economies and vigorous growth of the developing world, posing a threat to regional economies dependent on exports.
The global backdrop highlights the importance of regional financial cooperation to facilitate trade and investment in the region as an alternative market.
"This cooperation will help reduce global imbalances, as Asia will rely more on intra-regional demand and less on exports," said Dr. Bandid, a former deputy governor at the Bank of Thailand. Asian economies also need to avoid beggar-thy-neighbour policies in handling gluts of inflows driven by loose monetary policy in advanced economies.
The initiative along with the Asean Economic Community, which is scheduled to begin in 2015, would complement each other as a starting post for measures to allow freer flow of trade in goods and services and labour within Asean.
Regional initiatives toward greater cooperation in the capital markets provide Asia with more investment options for their savings. The Asian Bond Market initiative and Amro were born under the umbrella of Asean+3 financial cooperation framework.
Amro will be tasked with monitoring economies and policies among members, and giving policy advice and research on issues of regional common interest.
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