..Press Release................................ UNESCAP News Services

Date 26 February 2007
Media Advisory No. N/05/2007

Note: This press release and the speech by Mr. Kim Hak-Su are embargoed until 12:00 Bangkok/05:00 GMT, Monday, 26 February 2007.

UNESCAP WARNS REGION AGAINST FALSE ECONOMIC SECURITY
10 YEARS AFTER ASIAN FINANCIAL CRISIS

Currency management key to continued financial health in region

BANGKOK (United Nations Information Services) – The UN’s regional arm in Asia and the Pacific warned East and South-East Asian governments today not to be lulled into false security by the current economic boom, as some of the risks which preceded the massive financial crisis ten years ago could be seen today.

In a keynote speech to the ‘Conference on Ten Years After the Asian Financial Crisis: Vulnerabilities of East Asia,’ Mr. Kim Hak-Su, UN Under-Secretary-General and UNESCAP Executive Secretary, said that a global liquidity bonanza, inflated asset values, and tremendous speculative pressures on regional currencies could destabilize regional economies, as happened in 1997.

“The region cannot afford to rest on its laurels. Globalization, along with its many benefits, exposes economies to quick and harsh risks from the constantly shifting international environment,” he said.

As a precaution, Mr. Kim advised government to ensure that exchange rates are more flexible.

“Greater flexibility would help take away the ‘one-way bet’ that encourages even more capital inflows than would otherwise take place,” he added, “since markets would quickly realize that the currency could move in either direction.”

He advised central banks to be “clear about their objectives for price stability and their exchange rate policy.”

Mr. Kim recommended that the overarching goal of governments in the region should be to build strong and flexible economies that could weather global shocks and adapt to new realities.

He proposed a four-track approach which included ensuring solid macroeconomic fundamentals, developing healthy financial sectors, having robust microeconomic foundations, and improving regional cooperation.

The full text of Mr. Kim’s keynote address to the Conference on Ten Years After the Asian Financial Crisis: Vulnerabilities of East Asia, held in Bangkok, Thailand, on 26 February, is available from the UNESCAP website: http://www.unescap.org/unis/index.asp

For further information please contact:
Mr. Hak-Fan Lau, Chief, UN Information Services Bangkok
Tel: +(66-2) 288-1866-68; Mobile: (66) 847001147; Fax: +(66-2) 288-1052
E-mail: unisbkk.unescap@un.org; lau@un.org

* *** *