Finance chiefs from the Association of Southeast Asian Nations plus Japan, China and South Korea on Tuesday agreed on the need to remain vigilant amid U.S. and European banking woes despite "limited" direct spillovers so far.
After a meeting in South Korea's Incheon, the finance ministers and central bank governors also said tight financial conditions, along with supply chain bottlenecks and higher commodity prices caused by Russia's war on Ukraine, pose downside risks to the economic outlook for the region.
The finance chiefs met on the fringes of the Asian Development Bank's annual meeting, shortly after San Francisco-based First Republic Bank became the latest U.S. lender to fail.
JPMorgan Chase & Co. came to its rescue, easing some market jitters over the stability of the banking sector following the earlier collapse of Silicon Valley Bank and Signature Bank.
"While the recent banking sector turmoil in the U.S. and Europe has had limited direct spillovers for the region, the meeting reiterates the need to remain vigilant," a joint statement said.
The finance chiefs expect the region to see growth gain traction in 2023 while inflation has been "broadly contained" compared with other regions.
Aggressive interest rate hikes to rein in surging inflation in advanced economies like the United States and Europe have raised concerns about slowing global growth.
The ASEAN-plus-three group also agreed to explore new financing by studying a paid-in capital structure to boost the effectiveness of the regional safety net, the statement said.
Japan has been seeking to enhance the Chiang Mai initiative, launched in the aftermath of the 1997 Asian financial crisis to provide liquidity in times of emergency. Tokyo wants to ensure funds can be mobilized timely to cope with future pandemics and natural disasters.
