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MANILA, Philippines – Economists attending the ADB meeting in Manila have agreed that financial safety nets need to have a strong surveillance system, among others, for it to be really effective.
Asian Development Bank (ADB) President Haruhiko Kuroda said financial safety nets were already in place in Asia, but he believes that financial sector surveillance is lacking, thus, the need for this to be established firmly along with market players' participation to bring in appropriate financial regulations.
He said capital resources as well as involvement of the International Monetary Fund (IMF) were also a must, with the latter providing not only monetary assistance but also technical aids.
“IMF can provide instant additional element, value added not only analysis but also monetary. And that is quite useful also in Europe so why not Asia,” he said during the seminar "Reforming International Financial Safety Nets" on the sidelines of ADB’s 45th Governors Meeting being hosted by the Philippines at the Philippine International Convention Center (PICC) from May 2-5, 2012.
Kuroda also said that “regional financial safety net mechanisms and the IMF is a relationship that must be mutual, respecting each other and not one system subordinate to the other system.”
Relatedly, Bangko Sentral Governor Amando Tetangco Jr., a panelist at the seminar, identified funding, clear and transparent governance structure, surveillance and incentives structure as the things necessary for an effective safety net.
Also, ADB Chief Economist Changyong Rhee raised the need for a stronger surveillance because it “will be used for the decision-making” and incentives.
“Without stronger surveillance it maybe hard for them to check on what’s really going on,” he said.
Delphine D’Amarzit, Director General for International Financial Affairs, Development and Trade, and head of the French delegation to this year’s ADB Annual Meetings, said regulators need not be lenient and really need to prepare in advance.
“Prepare as much as possible but not cover yourself with a straitjacket because when crisis arises you need to change some of the balances,” she said.
D’Amarzit added the need for a “quick political response” and for regulators to have an open communication.
ADB Asia and Pacific Department Director Anoop Singh, in the same seminar, said crisis was now global and “therefore safety nets have to have global views.”
“For global economy the safety nets have to be beyond financial; they must include surveillance and political outlook,” he said.
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