MANILA - THE Asian Development Bank (ADB) warned on Thursday that Asia's financial institutions remain at risk from US financial turmoil even if the region's losses from the sub-prime crisis have been lower than elsewhere.
Asia appear to be cushioned against immediate effects of the turmoil with its growing domestic demand, rising foreign currency reserves and healthy current accounts, but vulnerabilities remain, ADB President Haruhiko Kuroda told a Manila regional forum on the US sub-prime mortgage crisis.
'Even if subprime-related losses have to date been lower than elsewhere, there is no guarantee recent events will not affect major Asian financial institutions,' Mr Kuroda said.
He called for the establishment of an 'Asian Financial Stability Dialogue' among finance ministers, central banks and financial regulators in the region to coordinate regulatory development and improve surveillance of the region's financial markets.
'This week's turbulence only underlines the urgent need for central banks and regulators to assess the underlying problems and build a cogent and proactive plan of action to better preserve regional financial stability,' Mr Kuroda said.
Mr Keith Lui, executive director for market supervision of Hong Kong's Securities and Futures Commission, said the crisis will have minimal impact in Asia given the region's limited exposure to sub-prime credit products.
The region has also been strengthened by post-1997 Asian financial crisis reforms, including a more robust regulatory and infrastructure framework and enhanced governance, he added.
But Mr David Fernandez, head of JP Morgan's Emerging Asia Research, said pain from the US financial crisis is being felt most acutely in Asia, where stock markets are now among worst performing among emerging economies.
Asian stocks tumbled on Thursday as investors feared more financial institutions could succumb to the global financial crisis after the collapse of Lehman Brothers and government bailout of American International Group. -- AP