|
The Korean government has proposed a meeting of the finance ministers of Korea, China and Japan to find ways of dealing with the spreading U.S. financial crisis that is impacting real economies of individual countries. The schedule and agenda of the talks have yet to be finalized, but a vice finance ministers¡¯ meeting has been set for the middle of this month, while talks are scheduled for the speedy formation of a US$80 billion Asia fund.
The 10-member ASEAN plus Korea, China and Japan, presently engage in so-called ¡°swap¡± deals in which they entrust their own currencies in exchange for obtaining short-term U.S. dollar loans. This is the result of the Chiang Mai Initiative signed in 2000, where ASEAN+3 decided to help each other avoid another Asian financial crisis. Through this agreement, Korea can exchange $13 billion with Japan and $4 billion with China in an emergency measure designed to supplement our foreign reserves if necessary.
The Asia Fund envisages the creation of a much stronger intra-trading financial cooperation system than the mere swapping of money. If Asian countries, which hold more than two-thirds of the world¡¯s U.S. dollar reserves, agree to form a joint fund that can be used in times of emergency, global financial markets will get a strong boost in calming jitters.
This financial crisis has spread to Europe, and financial institutions and businesses around the world are in a frenzy to secure capital. No country is immune as economies around the world are intertwined in a network where capital movements transcend borders. That is why international cooperation in terms of policy is necessary.
Dominique Strauss-Kahn, managing director of the International Monetary Fund, said individual countries must show the market that they will not deal with the financial crisis alone. France, Germany, England and Italy held a mini summit on Saturday and issued a joint statement saying they will take all necessary measures to ensure the stability and health of the European banking and financial systems.
It is not an easy task to establish an Asia-wide financial system like a joint fund. There have been many agreements in principle during previous ASEAN+3 meetings, but progress has been held back due to disagreements over the amount of money each country must put in. This global financial crisis could offer the chance for the joint fund to be established at last. For that to happen, China and Japan must get on board. The meeting of the finance ministers could be a starting point.
|
