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MAS Official Says Regional Cooperation Can Shield Asia’s Financial Market From Europe Crisis

As the European debt crisis drags on, a Singapore official remained optimistic that Southeast Asia can “weather the storm” by fostering regional cooperation between emerging and developed markets and by developing Asia’s financial sectors.

MAS Assistant Managing Director Ng Nam Sim said in a forum titled “Wings of Change Affecting Asia” that while Asia remains vulnerable from the ongoing debt crisis in Europe and the United States, the impact of the “global winds of change” can be minimized by strengthening and integrating Asia’s markets and developing its banking sector.

This move is composed of a three-fold strategy which involve broadening and deepening financial markets; linking markets; and cushioning the blows of potential risks. “These three elements are mutually reinforcing and will underpin a robust financial market that can best support the region’s growth and prosperity,” said Mr. Ng Nam Sim in his speech.

The first initiative will be undertaken by the ASEAN Capital Market Forum which aims to strengthen local currencies, improve regulatory standards and practices and widen the investor pool.

The second initiative is to enhance connectivity among regional markets through what’s called the ASEAN Trading Link. This involves linking up the stock exchanges of countries to create a single access point for ASEAN financial products to investors from the West. As of press time, Malaysia and Singapore’s stock exchanges have signed up to link up. Thailand was reported to join the trading link by the end of the year.

The third initiative is to provide a safety net mechanism for Asia’s markets through the ASEAN+3 Chiang Mai Initiative Multilateralisation (CMIM). Singapore plays a role in the third initiative by being home to AMRO or the ASEAN+3 Macroeconomic Research Office that was launched early this year. AMRO predicts looming risks, suggest remedial action and informs the CMIM for making better decisions.

Ng Nam Sim ended his speech by praising the ASEAN region’s mutual efforts in strengthening its economies and working towards a stronger financial market. With the initiatives in place, Asia may be able sustain its growth despite global economic threats.