Chinese Finance Minister Xiang Huaicheng voiced his support for a proposal for Asian nations to adopt currency systems less dominated by the US dollar at a meeting of Asian and European finance officials that ended yesterday.
The proposal was made by Japan and France during a meeting of finance ministers at the first-day session of the Asia-Europe meeting in the Japanese port city of Kobe on Saturday.
It says that currency systems effectively pegged to the dollar severely hurt Asian nations, which traded with many countries using currencies other than the dollar - dashing their competitive edge and worsening the 1997-98 regional crisis.
While Xiang said China supports in-depth studies on regional monetary cooperation, he urged Asian nations to approach the matter with caution.
"The choice of an appropriate exchange rate regime should be approached pragmatically and take into account a variety of factors, including the size of an economy, the degree of openness and the size of foreign reserves," Xinhua quoted Xiang as saying.
"Given the diverse circumstances in different countries, there is no one-size-fits-all exchange rate system," he said. "To some developing countries, intermediate exchange rate systems may be more appropriate choices."
Xiang said it is up to the developing countries to make their own choices in deciding appropriate exchange rate systems, adding that there should be no discriminatory conditions imposed on those countries which choose their own regimes.
But the proposal underlines a disenchantment with the dollar in Asia as well as hopes in the region for its own single currency - like the euro in Europe. The Kobe meeting was an apt place for the issue to be discussed and presented an opportunity for Asia to learn how Europe has come together financially.
Worries about the recent US economic slowdown and the exchange of views on currencies were the main topics at the meeting - the third of its kind aimed at strengthening financial ties between Europe and Asia.
Lessons learned from the Asian crisis that sent currencies plunging, workers into the streets and investors fleeing have also been an important part of the meetings that began in 1997.
Japan and France also urged regional cooperation to curtail volatility in currency-exchange rates. The European Monetary Union is a good example of how integration can work, their proposal said. "Strengthening regional ties is a way to ensure stability and flexibility," it said.
(Xinhua 01/15/2001)
