Asean set to monitor troubled economies

HANOI—The Association of Southeast Asian Nations will set up a financial surveillance office that will monitor countries within the region that are in danger of falling into recession.

Alladin Rillo, head of the Asean Secretariat’s finance and macroeconomic surveillance division, said the surveillance office, which will be based in Singapore, will recommend if a country can take advantage of the $120-billion regional currency swap mechanism known as the Chiang Mai Initiative Fund.

The fund will allow any Asean member-country in danger of a foreign exchange crisis to rapidly call up financial firepower by swapping its currency for those of its neighbors.

“The surveillance office will be very crucial because they will be the ones to study and give a recommendation on countries that are suffering from economic woes, which can then tap the fund,” Rillo said in a chance interview during the 1st Interdisciplinary Alumni Conference-Southeast Asia of Inwent (Capacity Building International-Germany).

Finance ministers in the region said the $120-billion fund would be enough to guard against a repeat of the 1997 Asian financial crisis that saw nearly two-thirds of the world economies going into recession last year.

The currency swap facility involves the central banks and finance ministries of Asean and its +3 partners China, Japan and Korea, as well as the Monetary Authority of Hong Kong.

As a regional liquidity mechanism, it aims to provide financial support to countries with short-term liquidity needs, and to supplement international financing arrangements.

Asean’s +3 partners contributed $96 billion. The rest of the fund was shouldered by the 10 member-states, with the Philippines contributing $3.68 billion. –Joyce Pangco Pañares, Manila Standard Today