|
: Now that the International Monetary Fund (IMF) seems to have successfully won a new lease of life, will the Asian Development Bank (ADB) do likewise? With the four-day ADB annual meet in Hyderabad beginning today, that is a question all member-countries need to address. With private capital flows many times larger than official ones, multilateral institutions like the IMF, World Bank and ADB run the risk of becoming irrelevant. Unless they find new roles for themselves. The IMF has just done it, though the experiment is still too recent to be declared a success.
This year’s ADB meet is expected to focus on trends in the global economy and their implications for Asia, from Basel-II norms for capital adequacy in banks to IT, labour and global capital flows. Nothing very dramatic can be expected there. Indeed, there is likely to be far more interest in a meeting on the sidelines between finance ministers from the Association of Southeast Asian Nations plus China, Japan and South Korea (Asean+3). The reason is, this meeting takes place against the backdrop of growing pressure on emerging Asian nations to address global imbalances by allowing their currencies to appreciate.
The issue acquires urgency, now that the IMF has a new mandate to “start immediate negotiations between countries with largest trade imbalances.” The worry is it might try to effect the much sought-after exchange rate adjustment between the US dollar and renminbi. Memories of the long-term damage to the Japanese economy caused by the 1985 Plaza Accord (signed by the then G5 nations France, Germany, Japan, the US and the UK to revalue the yen and the German mark against the dollar through coordinated intervention in currency markets) are bound to lead to serious introspection among the ministers who gather today in Hyderabad. Admittedly, the world has come a long way since the Plaza Accord and chances of a repeat are remote. Even so, any revaluation of the Chinese currency will have major repercussions for all others in the region. Ministers will have to take a tough call. Will they opt for more flexibility on their own or will they need to be nudged along by big brother?
More from Edits & Columns
Discuss this story on expressindia forums
|
|
 |
 |
 |
About Us | Contact Us | Advertisers | Site Map | Make us your homepage | Work for Us | RSS | Subscribe | Electronic Edition | Privacy Policy© 2009: The Indian Express Limited. All rights reserved throughout the world
