From April 4 – 7, 2010, in Nha Trang, Vietnam State Bank organized the 18th ASEAN Conference of Deputy Governors of Central Banks (ACDM 18) and the 6th ASEAN Conference of Governors of Central Banks (ACGM 6). Those activities are in the framework of Vietnamese ASEAN chairmanship.
ACGM 6 took place on April 7 under the chairmanship of Governor Nguyen Van Giau. Participating the conference are Governors and representatives of 10 Central Banks of ASEAN members. IMF Deputy Director General Shinohara also participated as panel member and discussed with ASEAN governors on regional and world economic prospects and challenges to central banks in post economic crisis.
ACDM and ACGM are organized annually together with a series of financial and banking conferences in the framework of ASEAN and ASEAN+3 to discuss on regional monetary and financial issues and share views on problems of common concern.
At ACDM 18, Deputy Governors and representatives have discussed on substances of initiatives for ASEAN financial and monetary cooperation, including ASEAN road map on financial and monetary integration and ASEAN+3 financial and banking cooperation.
Road map for ASEAN financial and monetary integration
The road map was approved in 2003 to deepen financial and monetary development and promote cooperation across the border of regional markets.
Basing on the contents of the road map, working groups were established to take care of various fields such as capital market development, liberalization of capital accounts and liberalization of financial services, and task force on integration targets. After the approval of ASEAN Economic Community General Plan (AEC Blueprint) by ASEAN Summit in November 2007 to accelerate the regional integration by 2015 instead of 2020, working groups have to expedite the cooperation and harmonization of RIA-Fin objectives in line with AEC Blueprint.
The task of working group on capital market development is to supervise and promote capital market activities among ASEAN. The working group has met and discuss at technical level to define priorities of activities in 2010-2011 to accelerate integration in bond market with ASEAN capital market indexes. Singapore, the host country, has developed the indexes to facilitate the evaluation of capital market, its openness as well as market clearance. The indexes will be used as an evaluation scale to update the development of capital market of ASEAN members from now to 2015.
The liberalization of ASEAN capital accounts will be implemented in accordance with the development and readiness of member countries, applying suitable measures to ensure macro stability and interests of member countries. By March 2010, member countries have completed national reports evaluating FDI flows and applying Article VIII of IMF on lifting of limitation to international payments and remittance. So far, objectives of AEC Blueprint have been achieved on schedule. Vietnam State Bank, representative of Vietnam, has actively participated in the working groups and coordinated with other member countries to promote the initiative.
The working group on liberalization of financial service has completed Negotiation Round 4 in the framework agreement on the liberalization of service of ASEAN (AFAS). The protocol has been signed and member countries have ratified Round 4 commitments of AFAS. Round 5 is under way and will be completed by the end of 2010. In the same framework, ASEAN members have coordinated to ensure their interests in the cooperation between ASEAN and other partners on financial and banking services, for instance, the negotiation with India on Free Trade Area including financial service.
To harmonize integration objectives and attain ASEAN economic community by 2015, in the working group on monetary and financial integration co-chaired by Malaysia and the Philippines, study of ASEAN financial background and integration goals currently is under way. The study focuses on issues relating to liberalization of financial and banking services, capital account management, as well as development of ASEAN capital market to fully assess ASEAN financial integration.
In the discussion on progress reports of working groups, representatives have also set orientation for activities of the working groups and their coordinating mechanism to implement successfully the road map of ASEAN financial and monetary integration.
Also at ACDM 18, deputy governors have agreed on the establishment of a working group on regional payment system. The proposal will be submitted to ACDM 6 on April 7 for approval.
ASEAN+3: Chiang Mai initiative and multilateralism process
Beside internal financial monetary cooperation, ASEAN members have also established cooperation mechanism with three partners, China, Japan and Republic of Korea with efficient and practical measures, especially Chiang Mai Initiative (CMI). CMI was approved in May 2000 to strengthen the cooperation and assistance in the region against future crisis by means of support for temporary difficulties in payment balance of regional countries. The monetary cooperation includes the expansion of ASEAN capital and monetary exchanges (ASA), bilateral exchange network among ASEAN+3 (BSA), and increased inspection and dialogue on economic policy in the region of ASEAN+3.
On the basis of Chiang Mai Initiative and experiences from 1997-1998 Asian financial-monetary crisis, ASEAN+3 members share the views that there must be a big fund of foreign currencies to support the payment balance and maintain foreign exchange reserve of each country to deal with crisis and to coordinate on policy and inspection of macro economy. The idea of multilateral support among ASEAN+3 has been studied since 2006 on the basis of multilateralization of BSA in CMI framework called CMIM. CMIM has been signed by concerned countries in late 2009 and started operating from March 24, 2010. Those countries have also exchanged letters of commitments to CMIM. It shows their efforts and commitments to help each other overcome difficulties in payment balance, macro economic stability against outside impacts.
CMIM is a form of short-term loan and financial support for members with difficulties in payment balance, an efficient support for international financial institutions such as IMF programmes. CMIM will increase economic inspection and support short-term payments in US dollars to ensure monetary and macro-economic stability.
The signing of agreement on CMIM shows economic significance and political will of leaders of ASEAN+3, the success of regional financial monetary cooperation, the high level cooperation and mutual support among member countries. CMIM is regarded as timely and efficient move of ASEAN+3 in their efforts to cope with the global economic crisis.
Quynh Chi
Vietnamese
