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To: PaulM who wrote (47649)	1/28/2000 10:58:00 PM
From: Rarebird	Read Replies (1) \| Respond to of 116762

3 Discount Rate Hikes and a Tumble.

To: PaulM who wrote (47649)	1/29/2000 4:48:00 AM
From: paul ross	Respond to of 116762

"...if it continues...this could be Long-Term Capital times a thousand," the hedge fund manager said. Message 12715850

To: PaulM who wrote (47649)	1/29/2000 5:39:00 AM
From: Alex	Read Replies (1) \| Respond to of 116762

Volcker expects one currency worldwide Small firms need to consolidate Parista Yuthamanop Trends toward regional currency integration will strengthen as countries adapt to the greater volatility of capital flows in financial markets, according to Paul Volcker, former chairman of the US Federal Reserve. Ultimately, a world currency would be implemented, he said on Thursday night during a speech sponsored by the Bank of Thailand. "It will not be a world that I will live to see," Mr Volcker said, noting that it took four decades for the European Union to establish its single currency. "But I hope that the cultural heritage and political diversity of nations will be treasured," he said. Consolidation among small firms unable to compete in the global market was a necessity. Mr Volcker noted that the size of Thailand's largest bank was only comparable to a community or small regional institution in the US. Major international investment firms had the ability to move "hundreds of billions of dollars" quickly on changes in market perception. New technology and the herd instinct of investors also worsened the economic collapse in Asia. "East Asian economies, for all their enormously favourable growth prospects, were financially too small, too exposed and too young to withstand the stormy seas of global finance," Mr Volcker said. Improved accounting standards, supervision and transparency were crucial for emerging countries in the future. A strong, independent central bank would also help bolster market confidence, a critical factor in determining the movement of funds. Countries such as the US have not escaped their own banking crises, Mr Volcker said. But the scale of damage was limited due to more diversified economies. He believed that in the new financial architecture, small countries would have greater reliance on larger ones, although he acknowledged there was no "simple policy fix" for emerging economies. Thailand must have a strong monetary policy and flexible private sector to cope with the rapid movement of large amounts of capital in today's world financial market. He said the crisis which hit Thailand when it devalued the baht was the result of institutional shortcomings. Monetary policy was also of the old-fashioned type with a fixed exchange rate. "What will be important for emerging countries is to make the central bank independent and free of political partisanship," Mr Volcker said. He also said that governments would have to stop bailing out the private sector. One reason for the crisis which hit Asia was the "moral hazard", whereby lenders knew that whatever happened the IMF would in the end have to bail out the debtor countries, he said. Another way of tackling the problem was regional co-operation. Given current trends it was possible that in the future there could be only one currency. This would help reduce market fluctuations. "National currencies are only illusory," he said. bangkokpost.com