Asia should create monetary fund, S. Korea`s business chief says

(ATTN: UPDATES with fresh quotes; EDITS lead para; TRIMS some previous quotes)
By Kim Deok-hyun
SEOUL, June 18 (Yonhap) -- Thirteen East and Southeast Asian countries must
create a regional monetary fund to prevent local economies from being further
rattled by the current global crisis, the head of South Korea's biggest business
lobby said Thursday.
Cho Suck-rai, chairman of the Federation of Korean Industries, also suggested
that the 10-member Association of South East Asian Nations (ASEAN) along with
South Korea, China and Japan should form an economic bloc to reshape their
export-dependent economic models.
"Asian nations have become the biggest scapegoat for the current global financial
crisis, though they have made few missteps in terms of economic policy," Cho said
at the World Economic Forum on East Asia.
An Asian Monetary Fund, modeled on the International Monetary Fund (IMF), should
be created for Asian nations to strengthen their economic fundamentals and
stabilize financial markets, he added.
"To that end, I think an international body that can supplement the functions of
the IMF in Asia, such as an Asian Monetary Fund, is necessary," Cho said.
A regional monetary fund in Asia was first proposed by Japan in 1997 in the face
of the Asian financial crisis.
The United States has reacted cooly to such proposals, as a regional fund would
threaten the economic influence of the U.S. in Asia, along with that of the
Washington-based IMF.
But the idea of creating an Asian Monetary Fund got a boost in May when ASEAN
members and the three economic powers in East Asia agreed to set up a US$120
billion emergency fund for use in case of an economic meltdown.
Cho described the May agreement as a "founding block toward an AMF (Asian
Monetary Fund)."
To form an Asian Monetary Fund, nations in Asia should resolve differences over
how to set up a regulatory system and who should have a leading role in operating
the fund, analysts say.
Cho also urged Asian nations to foster the Asian bond market and devise
mechanisms to stabilize the East Asian financial sector and navigate through the
current crisis.
"A stronger regional bond market would attract regional investors to put their
money in the Asian market instead of Western financial institutions," Cho said.
"This could help reduce the possibility of being hit by another financial crisis
in the future," he added.
kdh@yna.co.kr
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