Japan is set to propose the creation of an entity to promote financial stability in Asia during a series of meetings among financial leaders in Spain, government sources said Tuesday. The body would be modelled on the Basel-based Financial Stability Forum, an advisory body to the Group of Seven, and aimed at averting a regional financial crisis amid the prolonged global credit fears linked to the U.S. subprime woes, the sources said.
Tokyo is eager to discuss the plan during a spate of meetings among financial ministers from Japan, China and South Korea as well as leaders from the 10-member Association of Southeast Asian Nations, they said.
The gatherings are scheduled for Sunday ahead of a two-day annual meeting of the Manila-based Asian Development Bank in Madrid that starts Monday.
The FSF, established in 1999 after the 1997-1998 Asian financial crisis, brings together senior representatives of national financial authorities — central banks, financial supervisory bodies and treasury departments — from the G7 members and some other major economies.
The envisioned Asian version would jointly monitor the financial system of each regional economy through various means, such as examining the amount of bad loans held by financial institutions, the sources said.
If the body is established, officials from the Finance Ministry, the Financial Services Agency and the Bank of Japan would take part in its regular meetings.
The entity is expected to confer on topics such as problems associated with securitized financial instruments involving subprime loans, they said.
During the last G7 meeting in Washington earlier this month, the FSF submitted a report to financial leaders and sought joint monitoring of large global financial institutions to enhance risk management and prevent a recurrence of the worldwide market turmoil.
© Kyodo News
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