JAKARTA, Sept 5 (Reuters) - Indonesia’s central bank said on Wednesday it is pushing for talks on regional financial safety nets at the annual meetings of the International Monetary Fund (IMF) and the World Bank to be held on the resort island of Bali next month
Southeast Asia’s largest economy will host the meetings due to be attended by 15,000 officials, including central bank chiefs and finance ministers, at a time of intense pressure on emerging markets.
Currencies, stocks and bonds in emerging economies have slumped due to rising U.S. interest rates, global trade tensions and fears of contagion due to crises in Argentina and Turkey.
“There needs to be a collaboration between the Global Financial Safety Net and regional safety nets because some economies could fall deeper, like Argentina and Turkey,” said Dody Budi Waluyo, deputy governor of Bank Indonesia.
Waluyo said the IMF as the global lender of last resort should work with multilateral regional arrangements, such as Asia’s Chiang Mai Initiative on such collaboration.
Argentina has been forced to turn to the IMF for help because of a deepening economic crisis.
Indonesian markets have also been rattled, with the rupiah falling to its weakest in 20 years.
Bank Indonesia officials have said the country’s economy is resilient and able to withstand the market turbulence, citing adequate foreign exchange reserves and bilateral and multilateral swap deals as “second line of defense”.
But Indonesia’s foreign currency reserves had declined $13.7 billion between February to July, partly because of regular central bank intervention to defend the rupiah.
Waluyo said the IMF-World Bank meetings would also focus on topics such as the synchronization of advanced economies’ monetary policy normalisation and the impact of this on emerging markets, as well as IMF governance reforms. (Reporting by Gayatri Suroyo; Editing by Ed Davies and Kim Coghill)