Asia should work to integrate regional financial markets to encourage stability while global capital should be redirected toward productive economies and away from debt-ridden countries, Bank of Korea Governor Kim Choong Soo said.
“If better integrated Asian markets can produce more safe assets of our own, offer greater risk hedging, and help to reduce financial mismatches, the financial stability gains to us could be quite large,” Kim said in a statement prepared for a speech at a conference in Tokyo today.
Regional financial market integration should be guided by greater exchange-rate flexibility, freer capital mobility, transparent rules and regulations, fair competition on reciprocity and a clear roadmap for the private sector to cope with the expected changes, he said.
The world should pay greater attention to reviving economic growth, Kim said, adding that global financial resources have been directed too much toward financing unsustainable fiscal deficits in debt-ridden countries and too little toward countries with high productivity.
Kim and his board kept the benchmark seven-day repurchase rate unchanged at 3.25 percent yesterday, holding off raising borrowing costs for an eighth straight month as the economy slowed and exports declined due to the European debt crisis. The unanimous decision was predicted by 18 of 19 economists surveyed by Bloomberg News.