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Bank Of China Head Pledges To Pursue Financial Reforms

June 4, 1999

TOKYO (Nikkei)--Bank of China head Wang Xuebing said Friday that China will continue to tackle reforms of its financial system to ensure stability. He told delegates at the Future of Asia conference, sponsored by Nihon Keizai Shimbun Inc., that regional and international cooperation is needed to support these efforts.

"China will pursue financial system reforms at the same rate as before, although domestic financial institutions are set to come under extra pressure in the wake of the country's planned participation in the World Trade Organization," he said.

Wang and Zeti Akhatar Aziz, deputy governor of Bank Negara Malaysia, and two other speakers agreed that bond markets need to be developed so that Asian countries and companies can raise funds steadily over the long term.

Haruhiko Kuroda, director-general of the International Bureau of the Ministry of Finance, said Asia has a huge accumulation of deposits and each country should cooperate to encourage funds to flow into long-term investments.

Siding with him, Wang underscored how China's issuance of yen-denominated bonds helped the country procure funds for reconstruction.

Zeti appreciated the idea that developing countries in Asia should peg their currencies to a basket of currencies comprising several key units such as the dollar, euro and yen. But he said a stable yen is needed for the proposal to materialize.

Most participants referred to the need to regulate the flow of speculative short-term capital, broadly seen as the main cause of the 1997 currency crisis.

But Yusuke Horiguchi, associate director of Asia and Pacific Department, International Monetary Fund, cautioned that those countries which imposed regulations failed to prevent the flight of funds from their markets.

(The Nihon Keizai Shimbun Saturday morning edition)

Titles of speakers, names of companies, etc., were correct as of the time when the forum was held.