Friday, October 29, 2010
SINGLE CURRENCY NOT A PRIORITY FOR ASIA, SAYS MALAYSIAN CENTRAL BANK GOVERNOR
KUALA LUMPUR, It is not a priority for Asia to have a single currency to boost future growth as it is too costly to do so, says Dr Zeti Akhtar Aziz, the governor of the central bank of Malaysia, Bank Negara.
Dr Zeti said Thursday that she was against such a measure because its implementation would be difficult in view of the diverse economic models practised in the region.
"We (the central banks in the region) have discussed so many times about having a single currency. The conclusion is that we (the region) can achieve greater prosperity without going through (the process of) having a single currency," she told a media engagement programme on "Prospects and Opportunities of Islamic Finance" at the ongoing Global Finance Forum here.
She said Asia's challenge would also be much greater than Europe's as the region was the most diverse economy in the world.
In the medium term, she said, the costs and resources to implement such a unified currency far outweighed the benefits which could contribute directly to achieve greater financial and economic integration.
Dr Zeti also said the Asian region was now well-positioned to deal with monetary inflows because of it better developed financial markets, rigorous surveillance and "a larger regulatory toolkit" compared with the period of the Asian financial crisis of 1997-1998.
"The capital flows that are coming to the region and the potential for an asset bubble are a challenge but the regional central banks will not only use interest rates to deal with asset bubbles but also deploy macro-prudential policies," she said.
"We have more rigorous surveillance. We know almost real-time about these flows, where they come from and where they are placed, whether in equities or bonds or deposits. We are better positioned now to deal with it," she said when asked about reports huge inflows of funds seeking better returns from the West where "quanitative easing" by the authorities have rendered interest rates to near zero.
The governor said there was also no need to have a unified Islamic currency. "In fact, it could set us back," she said, when asked if a unified Islamic currency could further boost the growth of syariah-compliant financing.
On Bank Nergara's plan to award two mega Islamic bank licences, Dr Zeti said one licence would be issued by year-end to a bank which would focus on international businesses.
"They will do some retail banking but the focus is international business. It is to enhance linkages around the world, including Europe and the US," she added.
http://www.namnewsnetwork.org/v2/read.php?id=137619
