Thirachai Phuvanatnaranubala: Asian Bond Fund Speech by Mr Thirachai Phuvanatnaranubala, Deputy Governor of the Bank of Thailand, at Euro 50 Group Roundtable, Tokyo, 12 June 2003. *  *  *  Mr. Chairman, On the issue of Asian Monetary Cooperation, Thailand is certainly of less importance than Japan; therefore I have to apologize for speaking before Director-General Watanabe. Since it is late in the day and time is short, I will try to make it interesting by going directly to the Question and Answer session. However, I will be the only one asking the questions, and giving the answers. But I will restrict myself to only five. The first question: There are a lot of initiatives on financial matters going on in Asia. Does it mean that we are aiming for a monetary union of sort in Asia soon, or something leading up to a single Asian currency? I cannot speak for other Asian countries, and I do not know whether something is being planned for the more advanced countries, like Japan and Korea, or not. However, looking through the eyes of someone in Thailand, which is part of ASEAN, the final goal of monetary union, should it exist, is still around many corners. In my opinion, the level of economic integration in Asia is still much looser than Europe at their early stage of integration. You may point to the rapidly expanding inter-regional trade in Asia.
But in the nest step, the Asian Bond Fund will extend the investment into the various local bond markets in local currencies. The Fund will be calling on Asian countries. It will be ready to invest, but only if the market builds up the right conditions, and removes all the impediments. And you know that until the last impediment is removed, the market will not be attractive to foreign investors. And since these impediments often extend across many government departments and functions, as well as the judicial system, so only the strongest political commitment can remove all of them. So will the political commitment come forward? With money waiting at the door, and with peer pressure and available assistance within Asia, I think there is a good chance that it will. Someone asked me earlier how much of the Asian international reserves will have to go into these Asian Bond Funds. Well, I hope not a lot. It is not the job of the authorities to replace the market. What the authorities try to do is simply to act as a catalyst. In the long run, private money in Asia should find its own way to invest in Asia, whether it is savings from insurance companies in Japan, mutual funds in Hong Kong or pension funds in Singapore investing in corporate bonds all over Asia. Will there be enough opportunity for investing in Asia? Certainly! Many Asian countries still have very young populations. Half of Thais are under the age of 30.