IMF official praises Asia for improved financial risk control,corporate governance

A deputy managing director of the International Monetary Fund (IMF) Sunday praised Asia for its efforts since the Asian Crisis in the late 1990s to rebuild its financial sectors and increase its resilience to shocks.

Addressing APEC Finance and Development Program 2004 Annual Forum held in Sanya in south China's Hainan Province, Takatoshi Kato said the financial conditions of banks in the region have improved considerably as a result.

Capital positions have been rebuilt, with average capital adequacy ratios now around 8 percent in emerging Asia, and headline nonperforming loan ratios have fallen dramatically, to about 10 percent, he said.

Kato said the quality of supervisory and regulatory institutions has also been strengthened, in some countries through the creation of new agencies dedicated to overseeing financial sector stability, and in all countries, through upgrading of relevant capacities.

Sun Xiaoxia, deputy director of Finance Department of China's Ministry of Finance, said that China, which has drawn worldwide applause by refusing to devalue its currency during and after the crisis, has also created China Banking Regulatory Commission as a watchdog of its banking sector, and promulgated its Banking Supervision Law, revised the Law on Commercial Banks and other financial rules and regulations during the past few years.

At the end of 2003, China began transforming Bank of China and China Construction Bank, two of the country's four big state-owned commercial banks, into joint-stock companies. Efforts are underwayto invite international strategic investors for the two giants, while plans are being made on similar reform to the other two giant banks, one of which is the Commercial and Industrial Bank of China, the biggest commercial bank in the country.

Kato said there have also been significant reforms to strengthen corporate governance in Asia.

"Most Asian jurisdictions have substantially revamped their laws, regulations, and other formal corporate-governance norms, so that in many cases, Asian rules now reflect international best practices for corporate governance systems," he said.

Asian regimes have also made considerable progress in converging with international standards and practices for accounting, audit, and non-financial disclosure, he said.

Under APEC auspices, initiatives are underway to strengthen corporate governance, support freer and more stable capital flows,and develop securitization and credit-guarantee markets, Kato said.

But the financial reform agenda in Asia remains unfinished, he warned.

"In the banking sector, more progress is needed to improve riskassessment capabilities... Further efforts are needed to promote convergence and early adoption of international accounting standards, which will increase corporate sector transparency and also support investment flows both within the region and from further afield," he said.

Source: Xinhua