Asian Politicians Urge Action Over Oil [Asia WSJ]
Finance Ministers Cite Risk to Growth, Study Single Currency
By STANLEY WHITE and RICK CAREW
May 5, 2006; Page A12
HYDERBAD, India -- The finance ministers of 13 East Asian economies urged "swift action" to combat rising oil prices and laid plans to research the introduction of a single Asian currency.
Persistent high oil prices, hovering at more than $70 a barrel, pose a downside risk to East Asia's strong growth and steps need to be taken to stabilize oil markets, the finance ministers of the Association of South East Asian Nations, or Asean, plus China, Japan and South Korea said Thursday in a joint statement.
"Until now, we've been able to successfully control the impact oil prices have on inflation, but if [the rise in prices] continues, this is a risk," Japan's Finance Minister Sadakazu Tanagaki told reporters after the Asean+3 meeting.
East Asia's largest economies have become increasingly dependent on foreign oil, creating inflationary pressures as world oil prices rise.
The Asean+3 finance ministers said improving oil-market information and transparency would be an important step.
The countries also commissioned a study on creating a unified East Asian currency, taking up an often-debated idea among economists including those at the Asian Development Bank. Little progress has been made on plans to follow the model of the euro, as East Asia's economies remain far less integrated than their European counterparts.
The study, expected to be completed in 2007, will be led by a Japanese research institute.
The group also agreed to collective management of a set of currency-swap arrangements to provide liquidity support to other countries in Asean+3.
The Asean+3 group created a regional network of currency swap lines in 2000 under the Chiang Mai Initiative to give their governments more ammunition to fight speculative attacks such as those that sharply weakened their currencies during the Asian 1997-1998 financial crisis.
China's Finance Minister Jin Renqing said, "The collective decision-making mechanism symbolizes an important step forward in our regional financial cooperation."
The size of funds available for the currency swap lines has reached $75 billion, nearly double the amount available a year ago, the finance ministers said in a statement.
Asian finance ministers also said they will work with the International Monetary Fund to increase voting rights at the fund for smaller and emerging-market economies.
The IMF has a quota system that allocates voting rights to its members, but most of those voting rights are distributed among industrialized nations.
Asean comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. The Asean+3 met on the sidelines of the Asian Development Bank's annual meeting in Hyderabad, India.
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