Asia has become more resilient to risks of financial crisis, but further development of its financial markets is vital to match its growing and increasingly interdependent economies, a senior Bank of Japan official said.
Takeo Nakamura, head of the BoJ's centre for monetary co-operation in Asia, said the centre would help develop currency and capital markets in Asia through a "synergy effect" from its three key roles - promoting monetary co-operation, conducting research projects and providing technical assistance. "I don't know what kind of a crisis we may have, so I cannot say we are able to manage all kinds of crisis," Nakamura told Reuters in an interview.
"But Asian markets have strengthened dramatically through lessons learned from the crisis," he added, referring to Asia's financial turmoil that rocked the region in 1997/98.
While Asian economies and trade have become more interdependent, financial sector integration still has a long way to go, Nakamura said. "It is very important to develop financial markets that are compatible with dynamic movements in Asian economies," he said.
"There is no ready-made answer on this issue, and we are at the crucial stage where we listen to the needs of market participants and consider what authorities can do to help. The centre was established with this concept in mind."
Since its establishment a year ago, the centre has held several workshops on monetary affairs with other Asian central bankers and sent BoJ officials to training events through SEACEN (the South East Asian Central Banks) and the Japan International Co-operation Agency.
The centre is still taking baby steps in its first year, but it recently published a research report on Japanese firms' financial transactions in Asia. It plans to hold a symposium in January titled "Ten Years after the Asian Currency Crisis: Future Challenges for the Asian Economies and Financial Markets".
Speakers at the symposium will include central bank governors from Indonesia, Thailand, the Philippines and Malaysia and the International Monetary Fund's managing director, as well as BoJ Governor Toshihiko Fukui. "Ten years have passed since the Asian financial crisis, which had a substantial impact on Asian financial and currency markets," Nakamura said.
"With the lessons learned from the crisis, Asian nations are now achieving stable, high growth. It will be a good opportunity to look back on the financial crisis." He added that he hoped the symposium would provide a chance to discuss Asia's future from a wide, long-term perspective and help financial and monetary co-operation in Asia.
Asian nations have been making small but concrete progress in creating a network of currency swap agreements to ward off future currency turmoil and developing still-immature domestic bond markets.
Nakamura said such efforts have helped, but more is needed. "It is becoming more important to develop financial and currency markets as Asian economies become more interdependent. I hope we can make positive contributions to the process by continuing research and making use of the synergy effects."
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