Memo #51
(Hindi translation available here)
Karthik Nachiappan – karthiknach [at] nus.edu.sg
In the annals of Asian mythology, reincarnations of gods are professed to be far more potent than their ineffectual forebears; they are not only able to fulfill unfinished endeavours but also do so more dexterously. If mythology can serve as an indicator, then the recent establishment of the ASEAN +3 Macroeconomic Research Office (AMRO), a reincarnation of the doomed 1997 Asian Monetary Fund (AMF) to be headquartered and operational in Singapore in early 2011, represents a major regional feat. By institutionalizing the regional capacity to financially rescue distressed East Asian economies in moments of peril, the ASEAN hopes to eternally efface the excruciating memories of the Asian financial crisis without having to habitually turn west as they did in 1997.
Times and realities have markedly changed. The AMRO now stands to function as the regional lender of last resort endowed with the mandate to administer the $120 billion (USD) fund of foreign exchange reserves pooled by the ASEAN + 3. In addition, the founding of an internal regional economic surveillance apparatus bodes well in detecting, reporting, and mitigating the pernicious effects of macroeconomic irregularities. In due course, the unit is expected to dethrone the IMF regionally and is likely to do so by eschewing the constrictive IMF playbook, which earned much Asian scorn following the 1997 financial fiasco.
Financially, the constitution of a regional fund provides a much needed boost towards bolstering Asian bond markets as an alternate source of capital thereby further extricating America, Europe, and Asia. Japanese assent to the AMRO and subsequent jockeying in placing one of its bureaucrats at the helm of the nascent organization reveals a sea change in its regional attitude since Tokyo, with summons from Washington, foiled the inception of the AMF in 1997. Geopolitical exigencies have propelled Tokyo to stay lockstep with Beijing insofar as regional ambitions are concerned.
Nonetheless, critics and critiques abound on the eventual efficacy of the AMRO. Can it deliver? Despite shouldering a tall agenda, prospects are high due to one salient reason at this juncture: the presence of a palpable regional momentum driven by a germane desire to erect a robust bulwark against the vagaries of global finance.
About the Author:
Karthik Nachiappan is a Research Associate at the Centre on Asia and Globalization in the Lee Kuan Yew School of Public Policy of the National University of Singapore.
Links:
- Press release on the 13th ASEAN +3 summit, ASEAN 2010
- Asian Version of IMF to Evaluate Member Countries, MK Business News, December 2010
- China, Japan vie for East Asia Financial Surveillance Post, Associated Press, December 2010
- Annual Report 2009/2010, Monetary Authority of Singapore
Related Memos:
- See Karthik Nachiappan’s Memo, AMRO – Fleshing out Regional Monetary Cooperation in East Asia (Memo #90)
- Our other Memos about Asia