Asian economic experts say regional integration is the best way to prevent another financial crisis like the one that began 10 years ago. The region has bounced back, but officials at the Asian Development Bank are pushing governments to develop ways to avoid future economic breakdowns. Douglas Bakshian reports from Manila.
Thai Finance Minister Chalongphob Sussangkarn says Asia must funnel some of its $3 trillion in international reserves back into the region. He says the region should develop a long-term financing mechanism for countries in need of assistance.
In his comments at an Asian Development Bank conference in Manila, he took a swipe at Western-dominated lenders such as the International Monetary Fund.
"We need to set up an Asian monetary organization," he said. "And that needs to be set up in Asia so that in the future instead of people talking about the Washington consensus, they can be talking about the Manila consensus."
During the early 1990s, most Asian countries saw their economies expand rapidly. Billions of dollars in foreign investment poured into the region. But in early 1997, investors in Thailand became worried about the country's ability to repay foreign debt and they sold the baht. Thailand gave up trying to keep the currency from depreciating, and floated it on July 2nd, 1997, triggering a financial panic that swept across much of Asia.
The IMF lent money to several governments to stabilize their finances, but imposed tough demands in return, such as cutting budgets and raising interest rates. Some critics say those measures worsened the effects of the crisis, although other experts say they forced governments to strengthen their banking systems.
It took nearly a decade for a full recovery across the region.
One financial safety mechanism created since the crisis is the Chiang Mai initiative, short-term currency swaps between central banks to replenish depleted reserves. The Association of Southeast Asian Nations, Japan, China and South Korea organized it.
South Korean Commerce Minister Chung Duck-koo calls the measure effective, and criticizes management by the IMF in Washington. He compares the Asian financial crisis of 10 years ago to a fire being battled by firefighters located an ocean away.
"Since the big city fire department was located too far away, it seems that what we needed was a voluntary community fire brigade to minimize the damages through initial response," he said.
ADB President Haruhiko Kuroda also stressed that Asia's recovery from the crisis underscores the importance of regional economic integration and cooperation.
"The evolving regional economic environment, cross-border production networks, and the advances in information technology helped leaders recognize the need to work together to build better resilience to potential shocks, both external and internal," he said.
The Asian Development Bank is helping develop a regional bond market as one way of strengthening financial systems. It also advocates regional programs on trade, investment, finance and cross-border infrastructure as other ways to integrate and grow the economy of Asia.