Honorable Governors, Deputy Governors, Secretary General of the Asian Clearing Union (ACU),
It is a pleasure to join you at the 49th ACU Board of Directors Meeting hosted by the Reserve Bank of India.
ACU was established in 1974 at the initiative of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) to enhance regional cooperation.
I am pleased to see that ACU has continued operation for more than 47 years now and that its membership has grown over time, to nine central banks of ESCAP member States.
The COVID-19 pandemic has significantly changed the policy responses to health and socio-economic crises over the past year.
With millions of fatalities, deep economic contraction and working-hour losses amounting to the equivalent of 140 million full-time jobs in 2020, the ongoing crisis could reverse hard-won development gains by years, if not decades.
Our estimates suggest that an additional 89 million people in the region have been pushed back into extreme income poverty.
By deploying over $1.8 trillion, or nearly 7 per cent of combined GDP, in funding for emergency health response and immediate relief measures, countries in the region are facing considerable stress in their fiscal space and consequently rising level of government debt.
While meeting these challenges require innovative macroeconomic policies and initiatives by governments, there will also be an important role for regional cooperation.
I would like to highlight two policy priorities.
The first is to strengthen regional and subregional cooperation mechanisms to support governments in economic recovery and future crisis management.
There is a growing role for institutions to provide a regular and inclusive forum for central banks to discuss issues relating to economic cooperation among member States.
A multilateral currency swap arrangement could help the recovery from COVID-19 as it reduces the pressure on exchange rates that has resulted from capital outflows and depletion of foreign exchange reserves.
Furthermore, the current crisis has, however, provided the opportunity to establish new effective arrangements, such as the swap facility established under the auspices of the SAARC currency swap framework and managed by the Reserve Bank of India.
The Chiang Mai Initiative Multilateralisation set up by ASEAN+3 is an important multilateral arrangement in the region.
A second focus is to expand the scope and depth of regional and subregional knowledge-sharing of good national practices.
More and more, Governments have been exploring sovereign bond financing mechanisms in the Asia-Pacific region.
Bhutan, for example, issued its first government bond in September 2020 to support the economy in recovery from the COVID-19 pandemic while diversifying financial sources. A second bond was also recently issued to fund a national development bank.
A diaspora bond could also benefit from large emigrant communities, with which several ACU member States had successful experiences.
Given the cross-border nature of these bond transactions, there is a growing role of multilateral mechanisms such as the ACU.
In closing, I congratulate you for your long-standing commitments to regional cooperation and look forward to continued collaboration with you as UNESCAP to celebrate its 75th anniversary in 2022.
Thank you for your attention.