Comments on: Can Asia free itself from the IMF? http://www.eastasiaforum.org/2009/06/30/can-asia-free-itself-from-the-imf/ Economics, Politics and Public Policy in East Asia and the Pacific Sun, 12 Feb 2012 22:50:38 +0000 hourly 1 http://wordpress.org/?v=3.2 By: Joel Rathushttp://www.eastasiaforum.org/2009/06/30/can-asia-free-itself-from-the-imf/comment-page-1/#comment-38481 Joel Rathus Wed, 01 Jul 2009 09:20:39 +0000 http://www.eastasiaforum.org/?p=5422#comment-38481 It does seem that the CMI is a vehicle to build an Asian Monetary Fund by stealth and thus to de-link Asia from the IMF. Only it is not terribly stealthy. Eisaku Sakakibahara who proposed the first AMF has talked at length (both in English and Japanese) about his aspirations for the CMI, to whit the realization of the AMF. But if this is Japan’s intention, which it seems very likely that it is, I am unsure that others in the region share quite the same dream. Institutionalizing the CMIM into an AMF will take time. And this is for the same reason that the AMF proposal did not come to fruition back in 1998, namely concerns about Japan dominating the body and using it to lock-in its current financial advantages. So the challenge of the CMIM to the IMF’s relevance and centrality is only potential and not actual. But the CMIM is still a threat, and thus should be perhaps understood as a warning shot across the bow of the IMF. With regard to the last paragraph, I am not sure, but I think that the CMIM is not in fact designed to make the foreign reserves of its membership (in particular China and Japan) go further necessarily. It seems as the motivation rather lies with the excess of USD in their central banks and CMIM members (esp. Japan and China) looking for new and creative ways to use/unload them. I would invite comment here. It does seem that the CMI is a vehicle to build an Asian Monetary Fund by stealth and thus to de-link Asia from the IMF. Only it is not terribly stealthy. Eisaku Sakakibahara who proposed the first AMF has talked at length (both in English and Japanese) about his aspirations for the CMI, to whit the realization of the AMF. But if this is Japan’s intention, which it seems very likely that it is, I am unsure that others in the region share quite the same dream. Institutionalizing the CMIM into an AMF will take time. And this is for the same reason that the AMF proposal did not come to fruition back in 1998, namely concerns about Japan dominating the body and using it to lock-in its current financial advantages. So the challenge of the CMIM to the IMF’s relevance and centrality is only potential and not actual. But the CMIM is still a threat, and thus should be perhaps understood as a warning shot across the bow of the IMF.

With regard to the last paragraph, I am not sure, but I think that the CMIM is not in fact designed to make the foreign reserves of its membership (in particular China and Japan) go further necessarily. It seems as the motivation rather lies with the excess of USD in their central banks and CMIM members (esp. Japan and China) looking for new and creative ways to use/unload them. I would invite comment here.

]]> By: Lincoln Funghttp://www.eastasiaforum.org/2009/06/30/can-asia-free-itself-from-the-imf/comment-page-1/#comment-38432 Lincoln Fung Wed, 01 Jul 2009 03:50:14 +0000 http://www.eastasiaforum.org/?p=5422#comment-38432 I have two additional comments. The first one is about the voting mechanism and the other on policy monitoring. Firstly, on voting mechanism. While the majority voting mechanism is better and more efficient than consensus, it still does not have a strong feel of a close community, if it is based purely on countries’ shares of their contributions. A better voting mechanism would be able to balance two important things. First, it recognises countries’ contributions so to be accountable. Second, it can foster a closer community feel and recognise each member country as an important constituent. In that light, an alternative voting mechanism to the purely share based majority voting is to have a combination of this voting with a simple country member voting, as I have proposed elsewhere. That is to say, for example, to have the contribution based voting for half of the total vote and the other half to be determined by the number of member countries. If this alternative voting mechanism is adopted, any country irrespective whether it has contributed to the funds or irrespective to its size will have a vote for half of the total vote. This will make every country more respectable and thus will be more democratic. At the same time, the contribution of any country is also valued and its interest is reflected in the voting. Secondly, on policy monitoring. Rather than handing this role to IMF bureaucrats that have little to do with this Asian institution, why not outsourcing it to an independent research or academic institution to do it? Such an institution could organise a group of eminent people from the region with the relevant expertise to undertake that monitoring task. I have two additional comments. The first one is about the voting mechanism and the other on policy monitoring.

Firstly, on voting mechanism. While the majority voting mechanism is better and more efficient than consensus, it still does not have a strong feel of a close community, if it is based purely on countries’ shares of their contributions.

A better voting mechanism would be able to balance two important things. First, it recognises countries’ contributions so to be accountable. Second, it can foster a closer community feel and recognise each member country as an important constituent.

In that light, an alternative voting mechanism to the purely share based majority voting is to have a combination of this voting with a simple country member voting, as I have proposed elsewhere. That is to say, for example, to have the contribution based voting for half of the total vote and the other half to be determined by the number of member countries.

If this alternative voting mechanism is adopted, any country irrespective whether it has contributed to the funds or irrespective to its size will have a vote for half of the total vote. This will make every country more respectable and thus will be more democratic. At the same time, the contribution of any country is also valued and its interest is reflected in the voting.

Secondly, on policy monitoring. Rather than handing this role to IMF bureaucrats that have little to do with this Asian institution, why not outsourcing it to an independent research or academic institution to do it? Such an institution could organise a group of eminent people from the region with the relevant expertise to undertake that monitoring task.

]]> By: Lincoln Funghttp://www.eastasiaforum.org/2009/06/30/can-asia-free-itself-from-the-imf/comment-page-1/#comment-38425 Lincoln Fung Wed, 01 Jul 2009 03:03:51 +0000 http://www.eastasiaforum.org/?p=5422#comment-38425 In terms of location for such an Asian financial institution, Hong Kong may be a good candidate. Although Hong Kong is part of China, it and Macau all have a special status of special administrative regions in China. It requires “Hong Kong” Visa to visit and even mainland Chinese people are not free to visit without an appropriate travel document. It was a British colony for a long time. It is a more neutral place than any other places in East Asia. Hong Kong has also been a regional financial centre. So there are both physical and human infrastructures there. It is also located in the middle of East Asia geographically. Why not make Hong Kong a permanent place for Asian institutions? Why not China and other countries negotiate to make Hong Kong such a neutral place for all Asians to benefit, with China retaining its sovereignty, but otherwise letting Hong Kong be a place as it is now for the future to come? With huge land, it could be possible for China to make more land available for such a special region. I think all stakeholders should consider Hong Kong as a perfect candidate. In terms of location for such an Asian financial institution, Hong Kong may be a good candidate.

Although Hong Kong is part of China, it and Macau all have a special status of special administrative regions in China. It requires “Hong Kong” Visa to visit and even mainland Chinese people are not free to visit without an appropriate travel document.

It was a British colony for a long time. It is a more neutral place than any other places in East Asia.

Hong Kong has also been a regional financial centre. So there are both physical and human infrastructures there. It is also located in the middle of East Asia geographically.

Why not make Hong Kong a permanent place for Asian institutions? Why not China and other countries negotiate to make Hong Kong such a neutral place for all Asians to benefit, with China retaining its sovereignty, but otherwise letting Hong Kong be a place as it is now for the future to come?

With huge land, it could be possible for China to make more land available for such a special region.

I think all stakeholders should consider Hong Kong as a perfect candidate.

]]>