Asian economies well positioned to weather financial challenges’ | Sunday Observer

Asian economies well positioned to weather financial challenges’

A SEACEN official greets Central Bank Governor Dr. Indrajit Coomaraswamy.
A SEACEN official greets Central Bank Governor Dr. Indrajit Coomaraswamy.

The Central Bank of Sri Lanka hosted the 54th SEACEN Governors’ Conference and High Level Seminar and the 38th Meeting of the SEACEN Board of Governors in Colombo recently.

These events were attended by Governors and delegates of SEACEN member Central Banks, and Monetary Authorities.

The Deputy Managing Director of the International Monetary Fund (IMF), Mitsuhiro Furusawa, was the keynote speaker.

The SEACEN Centre plays a leading role in promoting greater understanding in financial, monetary and banking matters within the Asia-Pacific region. Set up in 1982, the SEACEN Centre serves Central Banks and monetary authorities in the Asia Pacific, through learning programs, research work, and networking.

The theme of this year’s Conference was ‘Monetary Policy in a Rapidly Evolving Environment’. Furusawa provided an overview of the IMF’s view of current economic policies and prospects for Asia, focusing on the need to strengthen macroeconomic building blocks.

Overall, Asian economies are well positioned to weather future monetary and financial challenges, although there is a need for continuous vigilance and encouraging structural reforms, prudent fiscal policies, safeguarding the credibility of Central Banks and ensuring strong financial institutions through a mixture of micro and macroprudential policies.

The conference and high-level seminar, comprised three sessions. In the first session, Governors discussed rapid technological changes and their implications on the issuance of currency in the future. The keynote speaker, Deputy Governor, Sveriges Riksbank, Cecilia Skingsley, shared the Swedish experience of substantially declining use of cash, the rise of alternative electronic means of payments, and the prospects of a Central Bank-issued digital currency.

Director, Development Prospects Group of the World Bank, Dr Ayhan Kose, delivered the keynote speech of the second session on ‘The stylised facts about inflation and inflation dynamics in emerging and developing economies’, with a focus on the implications for monetary policy frameworks.

Governors deliberated on the implications of the changing determinants of inflation, with a much greater influence of international – (rather than domestic) – drivers. Another topic of discussion was how emerging market Central Banks should react if the economic recovery under way in advanced economies leads to heightened global price pressures.

In the third session, Governor of the Central Bank of Iceland, Mar Guomundsson, shared policy challenges in Iceland, as a small open, financially integrated, economy.

Governors discussed the regional experience of conducting monetary policy in a rapidly evolving environment and its lessons in the light of broader developments in the world economy - such as geopolitical risks, uneven growth, accumulating financial imbalances, the more politically-charged context in which monetary policy is conducted, and capital flow volatility.

Governors agreed that complications from political uncertainty and threats to Central Bank independence have made for a more challenging assessment of threats to monetary and financial stability.

At the 38th meeting of the SEACEN Board of Governors, Central Bank Governor Dr. Indrajit Coomaraswamy, was elected as the new Chair of the SEACEN Board.