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The time is right for Asian nations to look at
financial integration, the Asian Development Bank (ADB) said in a
new study, stressing the benefits for promoting growth and reducing
poverty.
The institution said financial
cooperation could also help provide a buffer against shocks that
have rocked world markets in recent months, if governments worked
together to cooperate on policy.
While cooperation has increased
markedly since the 1997 Asian financial crisis, the Manila-based
multilateral bank said it was an “immediate priority” to bolster
supervision and surveillance of markets in the region.
“Asia’s macroeconomic policy
settings currently show little evidence of cooperation—the
region’s strong and stable macroeconomic results in recent years
reflect, in part, a favorable global environment,” it said.
“Eventually, Asian economies
may have a single market with common regulations, a common currency
and substantial freedom of movement for workers,” the bank
reported.
“But immediate policy requires
both a long-term vision and pragmatic initiatives that will show
early, step-by-step results.”
It said low trade barriers and
well-developed transport and communications links had driven
regional integration of production, attracting global investment and
leading to Asia’s emergence as a global manufacturing leader with
China as the main hub.
While Asia now trades about as
much with itself as with Europe and North America, with an output
roughly equaling these two other regions in terms of purchasing
power parity, financial cooperation in the region is still in the
early stages.
“A surprisingly low share of
Asia’s financial resources is invested in Asian assets,” the ADB
said.
“Most Asian funds are intermediated
through distant global markets, despite the region’s large savings
and ample investment opportunities.”
Faced with sharp exchange-rate
adjustments in the face of market turmoil and the global slowdown,
the bank said Asia would also benefit from “monitoring and
potentially coordinating macroeconomic and exchange rate
policies.”
--AFP
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