Forum calls for Asian financial unityKorea, Japan and China need to create a pan-Northeast Asian investment bank together to make better use of immense cash at their hands, according to an expert attending a trilateral forum in Seoul yesterday.
The move would ultimately reduce their susceptibility to an external financial shock and increase their influence in the global financial market, said Euh Yoon-dae, chairman of KB Financial Group, who was a panelist at the Northeast Asian Trilateral Forum.
Euh said despite sizable money holdings by the three countries combined - seven of the world’s biggest banks are Chinese or Japanese - they have played an insignificant role in the global financial market.
That was mainly because they don’t cooperate enough among themselves, he said, and that leads to the squandering of ample opportunity for regional development.
“If the financial institutions from three countries create a joint investment fund in the private sector, it would be able to activate investment in venture capital, infrastructure and the bond market in Asia,” Euh said.
Euh said cooperative financing within the Northeast region is crucial to ensuring the region’s financial independence and thus stability to external shocks.
He took the Bank of Korea as an example of an inefficient financing case in the country. He said the Korean central bank is depositing money into foreign financial institutions at an annual interest rate of less than 1 percent, while commercial banks in Korea are borrowing that BOK money and paying an interest rate as high as 3 percent to the foreign institutions.
“I only took a Korean example, but if we expand our perspective, I think it will be the same problem for all the Asian financial institutions,” Euh said.
At the forum, Sakong Il, Korea’s former finance minister, proposed upgrading a $120 billion regional protective financial arrangement, called the Chiang Mai Initiative Multilateralization, into the bigger and more autonomous Regional Monetary and Financial Fund.
The forum, co-hosted by the JoongAng Ilbo, Xinhua News Agency and Nikkei Daily, has been held annually since 2005 to put together the “heads of the sage” from the three countries in dealing with regional issues and coming up with efficient cooperative measures.
A total of 30 academic, political and business leaders from each of the three countries, including Lee Hong-koo, former prime minister of Korea, Yasuo Fukuda, former Japanese prime minister and Zeng Peiyan, former Chinese vice prime minister, attended the two-day forum held at the Shilla Hotel in central Seoul through yesterday. The next forum will be held in Japan.
At the forum, Hiroko Ota, former Japanese economy minister, expressed optimism for the potential of trilateral cooperation on various fields. Hu Wei, a professor at Shanghai Jiao Tong University, stressed strengthening exchanges among students of the three countries as a means of enhancing mutual trust, including through Campus Asia, a budding student exchange program among the colleges of the three countries.
By Moon Gwang-lip [firstname.lastname@example.org]
with the Korea JoongAng Daily
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