Sunday, October 26, 2008

Thailand to propose creating an 'Asian IMF'

By Tim Johnston in Bangkok

Published: October 24 2008 03:00 | Last updated: October 24 2008 03:00

Thailand, which currently chairs the Association of South East Asian Nations, is to propose setting up a regional financial institution for Asia that would be a cross between the International Monetary Fund and the World Bank.

"The first step would be a kind of Asian IMF, so if we are in trouble we could get some help from this multilateral organisation," finance minister Suchart Thadathamrongvech told the Financial Times. "Then if the situation is not in crisis, it would have money in the system and it could act as a kind of development bank, like the World Bank."

Mr Suchart's comments follow suggestions by Olarn Chaipravat, the deputy prime minister, that Asian nations should pool 10 per cent of their foreign exchange holdings into a superfund that could protect the region from the global turmoil fallout.

This would amount to about $350bn, (€272bn, £217bn) with the lion's share being provided by China, which has reserves of about $1,900bn, and Japan, with reserves of $1,000bn.

There has been no indication that either China or Japan would be willing to divert part of their reserves to an Asian superfund though, and Mr Suchart said that the negotiations were at a very early stage.

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