Asian eco­nomic watch­dog sees pock­ets of vul­ner­a­bil­ity

The Pak Banker - - BUSINESS -

East Asia's economies are in no im­me­di­ate dan­ger of a liq­uid­ity cri­sis but do face risks around some of their cor­po­rate debt lev­els, the head of a re­gional eco­nomic sur­veil­lance unit said on Fri­day.

Yoichi Ne­moto, di­rec­tor of the ASEAN+3 Macroe­co­nomic Re­search Of­fice ( AMRO), said the re­gion's economies have been re­silient in the face of the lat­est bout of in­vestor risk aver­sion that started last Au­gust.

"Mem­bers have ac­cu­mu­lated cer­tain ex­pe­ri­ences how to cope with th­ese (bouts of) mar­ket volatil­ity," Ne­moto told re­porters. "So far, coun­tries...have shown cer­tain re­silience to this kind of sit­u­a­tion," he added.

The ASEAN+3 re­gional bloc in­cludes South­east Asian na­tions, South Korea, China and Ja­pan. AMRO was es­tab­lished in Sin­ga­pore in April 2011 as a sur­veil­lance unit to mon­i­tor economies in the re­gion and granted sta­tus by ASEAN+3 mem­bers as an in­ter­na­tional or­ga­ni­za­tion ear­lier this month.

Its new le­gal sta­tus al­lows it to con­trib­ute to ASEAN+3 mem­ber coun­tries' de­ci­sion­mak­ing process on whether to ac­ti­vate a $240 bil­lion re­gional cur­rency swap ar­range­ment called the Chi­ang Mai Ini­tia­tive Mul­ti­lat­er­al­i­sa­tion (CMIM), through sup­port such as eco­nomic anal­y­sis.

Ne­moto said AMRO doesn't be­lieve the re­gion faces a liq­uid­ity cri­sis in the "very near fu­ture". The re­gional cur­rency swap scheme was ini­tially cre­ated in the wake of the 1997-98 Asian fi­nan­cial cri­sis and later strength­ened. AMRO's new sta­tus en­ables closer col­lab­o­ra­tion with other in­ter­na­tional or­ga­ni­za­tions such as the In­ter­na­tional Mon­e­tary Fund.

The Chi­ang Mai Ini­tia­tive Mul­ti­lat­er­al­i­sa­tion safety net is made up of two fa­cil­i­ties: a cri­sis res­o­lu­tion mech­a­nism and a cri­sis preven­tion func­tion. The bulk of funds can only be em­ployed along with IMF pro­grams, al­though 30 per­cent can be ac­ti­vated with­out them.

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