y v reddy : monetary co - operation in asia speech by dr y v reddy, governor of the reserve bank of india, at the imf - mas high - level seminar on asian integration, singapore, 3 september 2005. * * * mr. chairman and distinguished participants, it is a privilege to be associated with the deliberations on asian integration. singapore very vividly signifies both the diversity and potential for prosperity of the asian region. we deeply appreciate the hospitality and excellent arrangements made by the imf and mas for this high level seminar. the discussion paper circulated by the mas is of high quality and is a very useful document. this session is devoted to subjects of special interest to central banks, namely “ enhancing regional surveillance and monetary co - operation in asia ”. i intend focusing on one of the topics flagged for discussion in this session by the organizers, namely “ is there scope for co - operation or co - ordination on exchange rate policies over the long term? ” in this brief presentation, i propose to explore the following areas : first, changing dynamics of exchange rate regimes in asia ; second, importance of the asian economies for global prosperity and stability ; third, the asian dynamics of financial integration, fourth, the scope for co - operation or co - ordination on exchange rate policies ; and finally, some thoughts specific to the indian situation. changing dynamics of exchange rate regimes in asia in the period prior to the 1997 crisis, many of the asian economies followed an exchange rate regime of fixed but adjustable pegs. during the east asian crisis, it was realized that such pegs were quite vulnerable to speculative attacks. several east asian economies have adopted different types of exchange rate regimes in the post - crisis period. while some countries continued with pegged regimes, others moved over to some kind of managed floats. thus, it appears that in most economies of asia, the weight of experience seems to be tilted in favour of intermediate regimes, and post - crisis, the choice of the exchange rate regimes generally reveals a growing preference for relatively more flexible exchange rates than before. in this regard, given the current state of relatively benign international financial market conditions, it is possible to speculate that as the comfort level of forex reserves as self insurance is reached, and institutions and financial markets in asian economies acquire further resilience, this shift in preference might grow stronger and wider. the recent moves by the chinese and the malaysian authorities would only substantiate such a notion. an intermediate managed floating regime may

the jawaharlal nehru university in delhi. he earned his phd, like professor tendulkar, at harvard for his thesis entitled “ essays in information economics ”. he won several academic awards for his research which has been widely acknowledged as pushing the frontiers of development economics. bis central bankers ’ speeches identifying of the poor professor banerjee will be speaking today on “ identifying the poor ”. this is a topic that, for us in india, has been intellectually challenging and politically contentious. yet, poverty measurement and identification are important for at least three reasons. i. first, a credible measure of poverty is a powerful instrument for focusing the attention of policy makers on the living conditions of the poor. to put it another way, it is easy to ignore the poor if they are statistically invisible. ii. second, in order to target interventions, one cannot help the poor without at the minimum knowing who they are. this is the purpose of a poverty profile, which sets out the major facts on poverty and then examines the pattern of poverty to see how it varies by geography and by community. iii. third, measuring poverty helps to clearly define the expected outcomes of an antipoverty programme and also to compare the actual outcomes against the expected outcomes. poverty and the reserve bank while all of us understand the importance of poverty measurement for framing good development polices, one could legitimately ask about why the reserve bank is moving out of its traditional domain into identification and measurement of poverty. i believe this is a topic of importance for the reserve bank for at least two reasons. first, it is well known that inflation impacts different segments of the income distribution differentially. for example, low income segments, which spend a greater proportion of their budgets on food, are more adversely impacted by high food inflation. on the other hand, sluggish demand could well be constraining their employment opportunities. measuring the aggregate welfare consequences of a particular monetary stance is clearly something that central banks need to be able to do in order to make a holistic assessment of their policies. identification is one important step in that direction, which needs to be complemented with focus group or panel tracking approaches. the research community has made some effort in this direction ; perhaps it is time to give the approach more prominence in the macroeconomic policy dashboard. the second reason for the reserve bank ’ s interest in poverty identification and measurement stems from the priority the bank attaches to financial inclusion and literacy. i must add here that