As one obvious problem in national surveillance is the difficulty faced by authorities in diagnosing correctly the points of vulnerability of their economy, a natural starting point for filling the gaps in existing surveillance mechanisms is for countries to engage in informal workshops or seminars on selected topics, such as financial sector development, data requirements (collection, definitions), selection and use of indicators, exchange rate policies, governance issues, and supervisory or regulatory issues, without any hint of policy coordination. Such exchange of experience with others who have faced similar situations can promote more resilient economic and financial systems in the region through inducing improvements in the capacity of national authorities to formulate sound policies.

For example, regional or subregional informal meetings can provide a good medium for in-depth discussions on the selection of indicators, data collection methods and issues so that countries can acquire a feel for how to develop their national early warning systems better, taking into account the structure and peculiarities of their own situation while being alert to the relevant international or regional dimensions. There appears to be a significant need for such interaction on indicators as most support to date has been at the level of developing more comprehensive databases such as SDDS or GDDS, and not on the selection of a limited number of appropriate leading indicators. ADB is providing some limited support in this area to ASEAN members through in-house training. However, exchange of experience among responsible officials would clearly help.

Further, an analysis of the individual responses by authorities to financial sector problems and the subsequent reaction of markets can provide valuable lessons on how to manage financial liberalization adequately, as well as how to avoid policy mistakes. In a sense this was the purpose of establishing SAARCFINANCE, which groups the central banks and finance ministries of the SAARC countries. To date, three seminars or workshops have been held on specialized topics in the finance area, the last, in November 1999 being on the Asian crisis and its implications for SAARC countries. These are sponsored by one of the member central banks (each central bank has a SAARCFINANCE cell responsible for coordinating with the other cells) with participants from other central banks or ministries of finance paying their own travel costs. Each country attending presents at least one paper on the topic relating to its experience. These are interactive seminars which spread information and increase contacts among the staff of the participating institutions. They have also involved resource persons from outside international or regional organizations.

There is also an annual South East Asian Central Banks (SEACEN)¹⁰ Governors Conference to discuss current economic and financial developments in the region. SEACEN is the cooperative arrangement among South-East Asian central banks, started in 1966, which also has an annual meeting of Directors of Supervision and another of Directors of Research and Training (as well as a Research and Training Centre). These meetings provide a good forum for interactive exchanges.

Informal consultations can help highlight, for the benefit of the policy makers, the nuances of the environment within which their economies interact, and explore new ways of dealing with developments and turmoil in financial markets. The recent financial crisis has shown how the markets react to policy responses (or their lack) in the midst of contagion. In addition, policy makers can work towards an analytic framework for assessing the international impact of the policies of neighbouring countries. Different countries have different approaches to policy-making and financial regimes (for example, Thailand is using a market-based loan restructuring approach, whereas the approach of the Republic of Korea is more government-driven). The differences have implications for the behaviour of capital flows and vulnerability to shocks. Greater appreciation of these differences can help countries assess the impact of their policies in the region.

One advantage of engaging in regional or subregional seminars or informal meetings is that they provide the opportunity for countries, especially those which are not systemically important (of which there are quite a number in the Asian and Pacific region), to have their views heard on the impact of certain policies pursued by their neighbours. These considerations can go a long way in building the confidence of countries within the region to fit into the post-crisis international order.

ESCAP has a long history of conducting expert group meetings for selected groups of countries to promote exchange of experiences. Often these meetings have been specifically for the least developed countries (among recent ones were seminars on the topics of overcoming institutional constraints to implementing macroeconomic policies and options for exchange rate policy in least developed countries) with case studies on selected, more advanced economies as background material. Sometimes they have been directed at a wider grouping (for example, the seminar on improved management of the financial sector, and the high-level seminar on managing capital flows: national and international dimensions). These workshops involve not only country case studies but a comparative analysis and policy lessons, and can lead to the adoption of some non-binding conclusions and recommendations for the consideration of national decision makers. As they involve experts and are conducted in an informal manner, there is little constraint of political sensitivity, and frank exchanges take place.

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Footnotes:

¹⁰ Members of SEACEN are Indonesia, Malaysia, Mongolia, Myanmar, Nepal, Philippines, Republic of Korea, Singapore, Sri Lanka, Taiwan Province of China and Thailand. There are six observers (Cambodia, Fiji, Lao People's Democratic Republic, Papua New Guinea, Tonga and Viet Nam).