IMF chief calls for greater re­gional eco­nomic co­op­er­a­tion in Asia

The Pak Banker - - Front Page -

WASH­ING­TON:

Chris­tine La­garde, Manag­ing Di­rec­tor of the In­ter­na­tional Mone­tary Fund to­day high­lighted lead­er­ship role that Asia plays in the global econ­omy and in the IMF.

Dur­ing the dark days of the global fi­nan­cial cri­sis, it was Asia that kept the flame alive, ac­count­ing for about two-thirds of global growth, she said in a speech on “Asia and the Global Econ­omy: the Prom­ise of In­te­gra­tion” at the Global Pub­lic Lec­ture hosted by the Malaysia Eco­nomic As­so­ci­a­tion. “Clearly, the mo­men­tum is here, the dy­namism is here, and the fu­ture starts here.”

La­garde also em­pha­sized the virtues of eco­nomic co­op­er­a­tion, par­tic­u­larly trade and fi­nance, within Asia. “There is no ques­tion about it: look­ing ahead, Asia can ben­e­fit from open­ing even more doors to trade.” With re­gard to fi­nan­cial in­te­gra­tion, Ms. La­garde said there is even wider scope for progress. She noted that more than 90 per­cent of ASEAN cross-bor­der port­fo­lio in­vest­ment flows are with ad­vanced economies out­side Asia. “Asia—with its cur­rent ac­count sur­pluses—is sim­ply not in­vest­ing enough of its sav­ings in it­self,” she said.

Greater re­gional fi­nan­cial in­te­gra­tion could open up a host of new ben­e­fits. Ms. La­garde noted that it can boost do­mes­tic de­mand—partly by mak­ing it eas­ier for small busi­nesses in coun­tries like Malaysia to gain ac­cess to credit. It can make economies safer, by al­low­ing more in­sur­ance against volatil­ity and ad­verse developments. And greater ac­cess to fi­nan­cial ser­vices by the poor can re­duce in­equal­ity, she said. In­te­gra­tion does not come with­out costs, Ms. La­garde em­pha­sized. More fi­nan­cially-in­te­grated economies more ex­posed to volatil­i­ties, she said, high­light­ing the im­por­tance of eco­nomic man­age­ment and bet­ter reg­u­la­tion. “Mak­ing the most of fi­nan­cial in­te­gra­tion also means bet­ter reg­u­la­tion,” she said, which in­clude global rules like the Basel III re­forms, as well as lo­cal rules, like stronger and more har­mo­nized reg­u­la­tory frame­works, in­clud­ing in the area of cross-bor­der su­per­vi­sion.

Ms La­garde also urged pol­i­cy­mak­ers to take the ac­tions needed to achieve a de­ci­sive turn in the global cri­sis. She noted that the global slow­down is spread­ing to re­gions that have pre­vi­ously held up well. “In this in­ter­con­nected world, there is re­ally nowhere to hide.

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