mr funny
14-11-10, 23:05
http://www.straitstimes.com/PrimeNews/Story/STIStory_601776.html
Nov 11, 2010
INTERVIEW WITH TIMOTHY GEITHNER
Capital inflows into Asia 'reasonable'
Reality is that region will grow faster than major economies: Geithner
By Fiona Chan, Assistant Money Editor
THE massive wave of money streaming into Asia reflects the reality that the region will grow more quickly than major economies for some time, said United States Treasury Secretary Timothy Geithner yesterday.
In an exclusive interview with The Straits Times, Mr Geithner called these capital inflows 'reasonable' and said Asia 'is in a much better position to manage (them)... than it was at any time in the last several decades'.
As Asia races ahead of the rest of the world in recovering from the global downturn, its rapid growth will need to be fuelled by investments, he said.
Thus the influx of liquidity 'seems to me reasonable; it's rational, not surprising, and fundamentally desirable compared to the alternative'.
Capital has been flooding into emerging economies, including those in Asia, partly as a result of the US slashing interest rates to near zero and pumping billions of dollars into its sluggish economy.
Affected central banks have criticised the US for the move as they try to stem the inflow of hot money - which they fear could cause asset price bubbles.
They are also trying to dampen the appreciation of their currencies so as to keep their exports competitive.
While Mr Geithner acknowledged that the flood of capital poses 'pressures and tensions' for central banks in this part of the world, he said these are comparatively easy to handle.
'Those are easier risks to manage than any of the risks we faced as a global economy together over the last 2-1/2 years of crisis.'
Singapore bucked the trend last month by letting its rising currency strengthen further - a step in the right direction to accommodate inflows, Mr Geithner said.
'I think that's a necessary part of it... you've been able to demonstrate that part of managing that challenge is to allow the exchange rate to absorb some of those pressures,' he said.
'If you don't do that, then... the risk is those pressures will end up in higher inflation or in greater asset price bubbles.'
Speaking in his suite at the St Regis Singapore minutes before leaving for the Group of 20 (G-20) summit in Seoul, Mr Geithner also stressed the importance of Asia's growth to the US economy.
'We want to help Americans understand that our capacity to grow as a country, future innovation and job growth, are going to depend in part on the very encouraging growth rates we're seeing in Asia as a whole.'
His trip to Asia, which has also spanned Japan, India and Abu Dhabi, has made Mr Geithner 'even more optimistic... about both how strong the momentum seems to be for recovery and the basic advantages it offers the US'.
Fostering global cooperation is one of the US' objectives going into the G-20 meetings today and tomorrow. It also hopes to sustain momentum on financial reforms and underscore its commitment to keep markets open, he said.
While in Singapore yesterday, Mr Geith-ner met American business leaders in Asia, had lunch with financial industry executives, and met representatives of the Government of Singapore Investment Corp and Temasek Holdings.
He also met Prime Minister Lee Hsien Loong and Finance Minister Tharman Shanmugaratnam to discuss the G-20 agenda and regional economic outlook.
[email protected]
Nov 11, 2010
INTERVIEW WITH TIMOTHY GEITHNER
Capital inflows into Asia 'reasonable'
Reality is that region will grow faster than major economies: Geithner
By Fiona Chan, Assistant Money Editor
THE massive wave of money streaming into Asia reflects the reality that the region will grow more quickly than major economies for some time, said United States Treasury Secretary Timothy Geithner yesterday.
In an exclusive interview with The Straits Times, Mr Geithner called these capital inflows 'reasonable' and said Asia 'is in a much better position to manage (them)... than it was at any time in the last several decades'.
As Asia races ahead of the rest of the world in recovering from the global downturn, its rapid growth will need to be fuelled by investments, he said.
Thus the influx of liquidity 'seems to me reasonable; it's rational, not surprising, and fundamentally desirable compared to the alternative'.
Capital has been flooding into emerging economies, including those in Asia, partly as a result of the US slashing interest rates to near zero and pumping billions of dollars into its sluggish economy.
Affected central banks have criticised the US for the move as they try to stem the inflow of hot money - which they fear could cause asset price bubbles.
They are also trying to dampen the appreciation of their currencies so as to keep their exports competitive.
While Mr Geithner acknowledged that the flood of capital poses 'pressures and tensions' for central banks in this part of the world, he said these are comparatively easy to handle.
'Those are easier risks to manage than any of the risks we faced as a global economy together over the last 2-1/2 years of crisis.'
Singapore bucked the trend last month by letting its rising currency strengthen further - a step in the right direction to accommodate inflows, Mr Geithner said.
'I think that's a necessary part of it... you've been able to demonstrate that part of managing that challenge is to allow the exchange rate to absorb some of those pressures,' he said.
'If you don't do that, then... the risk is those pressures will end up in higher inflation or in greater asset price bubbles.'
Speaking in his suite at the St Regis Singapore minutes before leaving for the Group of 20 (G-20) summit in Seoul, Mr Geithner also stressed the importance of Asia's growth to the US economy.
'We want to help Americans understand that our capacity to grow as a country, future innovation and job growth, are going to depend in part on the very encouraging growth rates we're seeing in Asia as a whole.'
His trip to Asia, which has also spanned Japan, India and Abu Dhabi, has made Mr Geithner 'even more optimistic... about both how strong the momentum seems to be for recovery and the basic advantages it offers the US'.
Fostering global cooperation is one of the US' objectives going into the G-20 meetings today and tomorrow. It also hopes to sustain momentum on financial reforms and underscore its commitment to keep markets open, he said.
While in Singapore yesterday, Mr Geith-ner met American business leaders in Asia, had lunch with financial industry executives, and met representatives of the Government of Singapore Investment Corp and Temasek Holdings.
He also met Prime Minister Lee Hsien Loong and Finance Minister Tharman Shanmugaratnam to discuss the G-20 agenda and regional economic outlook.
[email protected]