March 24, 2000
Asian nations are reconsidering setting up a fund to keep them afloat in case another financial crisis strikes the region. But the proposal has received a cool reception from some Western countries, which believe such a facility is already provided by the International Monetary Fund (IMF). The plan is on the agenda for this weekend's meeting in Brunei of finance ministers from the Association of South East Asian Nations.
Suthad Setboonsarng of Asean said there was "general consensus" that the 10 Asean members plus China, Japan and Korea should have such a fund. Many countries are only just starting to recover from the financial crisis of the past couple of years, which had knock-on effects around the globe.
The proposal for a regional financing facility was first raised by Japan in 1997, but foundered because of strong opposition. Tokyo has since taken a back seat, not wishing to go head-to-head with the US on the issue. Mr. Suthad said there was enough money within the region to form such a fund, citing more than $700bn in international reserves among the 13 countries involved. He insisted the scheme would not duplicate the work of the IMF.
'Little additional value'
But William McDonough, president of the Federal Reserve Bank of New York, disagreed. "Most people have felt that regional monetary funds add very little additional value to what IMF does," he said. Mr Suthad asked: "Will they fund us when we have problems?" The United States is concerned that a separate Asian fund could undermine the IMF and weaken the willingness of Asian countries to adopt the tough reforms recommended by it.
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