(Petaling Jaya, Monday): When the Southeast Asian central bank governors opened their annual conference in Bali on Saturday, Bank Indonesia Governor Soedradjad Djiwandono told journalists that Indonesia's plan to set up a currency board would be among the issues to be discussed at the meeting, apart from asset inflation in the region and efforts to resolve economic problems resulting from the financial crisis which erupted in mid-1997.
The plan to set up a currency board to manage a Hongkong-style peg for the rupiah has triggered fresh market turmoil amid growing doubts over Indonesia's capacity to sustain such an arrangement, as well as concern over the political situation in Southeast Asia's largest country.
However, when the two-day 33rd Conference of the Governors of Southeast Asian Central Banks (SEACEN) closed yesterday, the region's central bankers shied away from the issue of the central board for Indonesia.
The final communique of the 33rd SEACEN did not offer an opinion on what the effect would be from fixing the Indonesian rupiah exchange rate within a currency-board framework.
It is most unfortunate that South East Asian central bank governors in their conference in Bali shied away from the issue of currency board and that they did not respond to the statement by the Bank for International Settlements General Manager, Andrew Crockett who told the conference that central bankers share the blame for the region's ills.
It has been reported that the final communique of SEACEN differed markedly from a draft circulating some four hours earlier, dropping most of the stronger observations. The draft said "it is difficult to say when a firm recovery is expected", which was dropped from the final statement and replaced with comments that included "growth rates during the next couple of years are probably not a good yardstick to gauge the potential macroeconomic performance of this region."
(16/2/98)