Kyoto, May 5:

Asian finance ministers agreed today to pool part of their huge foreign exchange reserves to shield themselves against a repeat of the financial crisis that rocked the region a decade ago.

Finance ministers from the Association of Southeast Asian Nations (ASEA-N) as well as China, Japan and South Korea also voiced optimism about pr-ospects for their econom-ies while noting such risks as slowing global growth.

A decade after the regional financial crisis, ministers are now concerned about a tide of capital flowing into the smaller econo-mies, whose exporters are struggling with stronger currencies that damage their competitiveness.

While in 1997 many countries in the region were running current account deficits, several now have large surpluses and swelling foreign exchange reserves because of their export-driven expansions.

“The major risk facing a country like Thailand today is very similar to the risk back in 1997, ie the risk of volatile capital flows,” said Thailand’s finance minister Chalongphob Sussangkarn. “The difference is that the risk at that time was on capital outflows while the risk today is on capital inflows. This is probably something that a single country will find difficult to deal with alone.”

In an effort to bolster their defences, ministers agreed in principle on a system of pooled foreign currency reserves to replace the existing bilateral emergency currency swap system.

Japanese finance minister hailed the agreement as ‘a very large step going forward.’

ADB under fire

KYOTO: The ADB began an ambitious overhaul of its poverty-fighting mission on Sa-turday under fire from the region’s poorest nations who say the agency is ignoring widespread hardships in an attempt to remain relevant to an increasingly wealthy Asi-a. The debate strikes to the heart of one of the world’s premier development banks, which was chartered four de-cades ago to end pov-erty though promoting growth, but has come under pressure to reinvent itself in line with projections.