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Published on March 27, 2008

She said yesterday that Southeast Asian Central Bank (Seacen) member countries, who met in Jakarta from March 20-22,  faced difficulties in framing monetary policies due to the risk of inflation with economic growth. They agreed that monetary policy alone could not tackle sticky problems without fiscal policy.

Seacen countries were optimistic they would be largely spared the US sub-prime crisis due to the strength of their economies and institutions.

Seacen concluded that despite the sub-prime fiasco, members should continue financial and capital-market development to enhance benefits for consumers and lower costs for businesses.

The meeting also prescribed financial and economic practices:

lset up a sovereign monitoring system for capital movements

lintervene in the foreign-exchange market

lintroduce administrative measures to smooth capital movements

lbe on guard for excess liquidity and bubbles forming in each sector

lIncorporate prudential measures in monetary policy to avoid overheating

lencourage financial institutions to go back to using basic financial instruments and be increasingly alert to risk.

Anoma Srisukkasem

The Nation