The willingness expressed by Asia's financial ministers to establish a reserve pooling is surely a necessary, albeit long-overdue, response to the financial crisis that swept across the continent a decade ago.
Last Saturday, the finance chiefs of the Association of Southeast Asian Nations (ASEAN), as well as those of China, Japan and the Republic of Korea, unanimously agreed in principle to build a self-managed reserve pooling to protect Asia's fast-growing economy from possible currency upheavals.
The memory of the 1997 Asian financial crisis remains vivid and bitter for many Asian countries, although they have by now managed to recover from it. So, the 10th anniversary of the crisis naturally reminds the region of the necessity to prepare for rainy days in the future.
In a sense, the past fears have served as a driving force behind the region's efforts to deepen financial cooperation.
By tapping into the ballooning foreign exchange reserves of many Asian countries, the region as a whole will be much better positioned to fight speculative attacks on local currencies.
Yet, the more important message that the prospective arrangement as an appropriate form of the multilateralization of the Chiang Mai Initiative has signaled is the rising common aspiration of Asian countries to facilitate regional integration.
A deeply integrated Asia is far from a reality, given the huge differences between Asian countries. And there is no lack of sober understanding of the difficulties to overcome.
However, the idea of a peaceful, prosperous and united Asia has become increasingly attractive to Asian countries, as the region, particularly developing Asia, took the lead of global economic growth.
The Asian financial ministers' reiterated commitments about their desire to accelerate and deepen structural reforms would support the region's sustainable growth. A broadly supportive external environment for regional economic expansion in coming years is likely to offer another cause for optimism.
But there will always be challenges on the horizon. These include possible spillover effects from potential slowdowns in major world economies, large global imbalances, greater financial market volatilities and recurrent rises in oil prices.
Establishment of a reserve pooling to stabilize intra-regional currency fluctuations is a tangible but small step to meet these challenges. The current sound economic conditions provide an opportunity for Asian countries to make bigger strides on regional integration.
(China Daily May 9, 2007)
