© Reuters. FILE PHOTO: A worker adjusts an ASEAN flag at a meeting hall in Kuala Lumpur, Malaysia, October 28, 2021. REUTERS/Lim Huey Teng
By Stefanno Sulaiman
NUSA DUA, Indonesia (Reuters) – Central bank governors and finance ministers of the Association of Southeast Asian Nations (ASEAN) meeting in Bali have agreed to strengthen cooperation between them to better withstand future global crises, chair Indonesia said on Friday.
The gathering of finance leaders of ASEAN, a region of about 650 million people, comes amid a backdrop of recent global banking turmoil after the collapse of Silicon Valley Bank and the bailout and takeover of Credit Suisse.
“We recognise more and more regional cooperation (is needed) to be able to respond any possible crises, whether food, energy or pandemic,” said Sri Mulyani Indrawati, finance minister of Indonesia, which is chairing ASEAN this year.
“We think that this is going to be an issue for any next cycle of crises, then the fiscal need to be also ready and strong,” she told a news conference.
The finance cooperation would focus on areas like trade, investment and bilateral tax agreements, Sri Mulyani said.
The meeting also recognised the need for ASEAN countries to direct their monetary policy focus on controlling inflation, especially core inflation, Indonesia’s central bank governor Perry Warjiyo said.
“The interest rate policy should be the main instrument, but could be complemented with foreign exchange intervention, as well as capital flows management if deemed necessary,” he said.
Furthermore, the meeting also agreed to boost the use of local currencies for settlements, or LCS, to reduce volatility and exposure to major currencies.
“The more the country use LCS, the better we can withstand global financial crises,” Warjiyo added.
They also agreed to continue the discussion on crypto assets, including how to regulate it, the governor said.
At a meeting on the sidelines of the event, the central bank governors of Indonesia and the Philippines said their banking systems were resilient and that stricter regulations were in place to prevent a repeat of the Asian financial crisis in the late 1990s.