Talks about a common currency took the backseat here this weekend, with Asia's financial elite focusing on developing the bond market as a steadier source for the region's massive funding needs.
Bonds, which received relatively less attention at previous meetings of the Asian Development Bank (ADB), was the buzzword among finance officials and corporate executives gathered in this South Korean resort island.
In an attempt to attract foreign interest, East Asian finance ministers Saturday launched a Web site that would serve as a one-stop clearinghouse for information on the bond issues.
Bonds are securities representing debts issued by governments or large corporations to finance projects or businesses. Terms can range from one to three months to as long as 30 years.
The bond market provides an opportunity to tap into Asia's massive savings which if invested within the region could reduce exposure to external shocks.
While there had been discussions about the prospects of a single East Asian monetary unit here, the consensus was that it remained a few decades away and that efforts should be geared toward developing capital markets, stabilizing exchange rates and improving a web of bilateral currency swaps.
"The common currency is not on the table," Malaysian Second Finance Minister Nor Mohamed Yakcop told reporters after a meeting between Southeast Asian ministers and their counterparts from China, Japan and Korea on Saturday.
"What we are more concerned [with] and what is more practical and what we are very excited in working towards is developing the capital markets," Yakcop said.
With Asia's infrastructure requirements alone estimated at US$250 billion a year in the medium term, accessing capital through the bond market has become an attractive choice.
Experts here have noted that one of the reasons for the 1997/98 Asian financial crisis was that most of the funding for long-term, big-ticket projects in the region was financed by short-term lending from the banks.
Joseph Yam, chief executive of the Hong Kong Monetary Authority, said there was a need to reduce Asia's vulnerability by "building bigger, deeper and more robust and diversified capital markets."
"While the interesting subject of monetary integration, which would provide a long-term solution, has been receiving some nascent attention, efforts to enhance the efficiency of financial intermediation within the region should be stepped up," he said in an address to the annual meeting yesterday.
Shielding the region from the external vulnerabilities by reducing reliance on foreign capital "underscores the importance of greater efforts to enhance the efficiency" of financing sources within the region, he said.
Japanese Finance Minister Sadakazu Tanigaki said Japan is committed to playing a leading role in the Asian Bond Markets Initiative, which aims to develop efficient and liquid bond markets in Asia.
For the first time, organizations like the ADB and the Japan Bank for International Cooperation (JBIC) can issue local currency denominated bonds in Thailand and China.
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