RBI urges more coordination in Asia: Report

RBI governor said more policy co-ordination between Asia's monetary authorities would help the region's markets.

More policy co-ordination between Asia’s monetary authorities would help the region’s markets better cope with the global financial crisis, Reserve Bank of India (RBI) governor said in remarks published on Monday.

The RBI Governor Duvvuri Subbarao told the ‘Financial Times’in an interview that there were some informal contacts among the region’s policymakers, but more concerted action would have greater impact.

“I think (greater co-ordination) would be helpful especially in times of crisis like this,” he said.

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“Although there is no institutional arrangement spanning Asia, there are informal arrangements. Some of the governors have been courteous enough to call me and let me know of their action.”

Turbulence in US and European financial markets, spilled over to Asia, knocking stock markets to multi-year lows and hitting the regions’ currencies.

Last week, the RBI slashed its main interest rate by a full per centage point to 8 per cent and has also cut the amount of cash banks are required to keep with the central bank.

On Monday, South Korean authorities cut their benchmark rate by 75 basis points, acting ahead of a scheduled policy meeting and just a week after the authorities in Seoul committed more than $130 billion to stabilise its banking sector and financial markets.

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But so far Asian authorities have not joined forces in a concerted action the way industrialised nations did earlier this month, delivering a round of coordinated interest rate cuts and pledging hundreds of billions of dollars for bank bailouts and debt guarantees.