[stop-imf] Koehler says could accept Asia Monetary Fund

[Robert Weissman]

New IMF managing director welcomes debate on Asian monetary fund

BANGKOK, June 1 (AFP) - The International Monetary Fund's new managing
director said Thursday he welcomed discussions about an Asian monetary fund,
an idea rejected by many IMF officials and member countries in the past.
"Why shouldn't we discuss an Asian monetary fund (AMF)?" said Horst Koehler
in Bangkok at the start of a five-nation Asian tour.
"I come from Europe, where monetary union has developed," he said, adding he
was therefore open to the idea of regional monetary unions.
"I'm prepared to discuss everything ... It's up to the region to decide on
an Asian monetary fund."
During the early days of the Asian economic crisis, which began with the
collapse of the Thai baht in July 1997, Japanese officials suggested an
Asian monetary fund (AMF) could help East Asian economies in trouble and
check financial contagion in the region.
Western countries, including the US and other major funders of the IMF, shot
down the AMF idea because they feared it would dilute the influence of the
IMF in Asia.
But Koehler insisted that the IMF and AMF could co-exist.
The idea of an AMF "is not in opposition to the IMF," he said.
In recent weeks, senior economists and government officials in the region
have again raised the idea of an AMF.
On a visit to Bangkok four weeks ago, Eisuke Sakakibara, a former vice
finance minister known as "Mr Yen" for his influence over financial markets,
told reporters that the region needed an Asian Monetary Fund.
"In the 21st century, countries in Asia ... need to build defense mechanisms
to shield us ... such as an Asian Monetary Fund," he said.
Asian states needed a regional monetary fund to "inject liquidity during
times of crisis, complement the IMF ... and forestall future crises,"
Sakakibara said at a forum of Thai and Japanese executives.
On May 6, Southeast Asia and Japan, China, and South Korea agreed in the
Chiang Mai Initiative to expand a network of currency swap accords.
Ministers said the move would be a first step towards establishing a "well
coordinated economic and financial monitoring system in East Asia."
Koehler welcomed the Chiang Mai Initiative but said an Asian Monetary Fund
was some years away.
"There needs to be confidence in the soundness" of Asian states' economies
before the region can embark on a monetary fund, he said.
And "a lot of work still needs to be done" in promoting "trust among
potential member states" of an AMF, Koehler said.
During his visit to Bangkok, Koehler met with Prime Minister Chuan Leekpai,
Finance Minister Tarrin Nimmanahaeminda and other senior Thai officials.
Koehler, who left for Beijing on Thursday afternoon, will visit Seoul on
June 3, Jakarta on June 4 and New Delhi on June 5.