A regional fighting fund will require political as well as economic cooperation Asian countries this month took their first joint step since the onset of the 1997 regional recession to defend themselves against future currency crises. The financing plan represents significant progress. It marks the first collective effort by countries in the region to guard against another speculative attack on one of their currencies.
Significant obstacles remain The new financing plan faces a host of potential problems.
Another is the likelihood of a falling out between Japan and China. Yet China is as keen to curb Japan's economic influence in the region as Japan is to enhance it. One of the possible attractions of an Asian financing mechanism, according to its supporters, is that it may not impose the stringent economic conditions that often accompany an IMF stand-by facility. The size of the financing pool also presents problems. Even that might be insufficient if contagion caused currency instability to spread quickly.