Asian countries must boost reform of their financial sectors to achieve sustainable economic growth and prevent financial crises from recurring, according to an interim report released Wednesday by a Finance Ministry advisory panel.
In the report on Asian economies and their financial sectors, the panel said Asian nations need to adopt more robust reform measures, such as reinforcing domestic banks.
While noting that Asian countries have been promoting reforms of financial and corporate sectors since the currency crisis of 1997, the report says "implementing appropriate economic policies, such as structural reforms, is increasingly becoming important for Asian countries to achieve sustainable growth amid an economic deceleration."
The report, compiled by the subcommittee of the ministry's foreign exchange council, recommends that Asian countries strengthen domestic banks because they are not fulfilling their intermediary role as providers of stable and long-term funds for local firms.
Asian countries generally have high savings rates and banks need to strengthen the redistribution of savings into various forms of investment, the report says.
Many local banks that belong to corporate groups must become more independent and improve their governance to increase efficiency, it says.
The report also recommends Asian countries reinforce their stock and bond markets to provide stable funds for corporations.
Such markets will supplement bank lending, according to the report.
The subcommittee will hold further discussions on key issues, including Asia's foreign exchange regime and cross-border capital flows. It will compile a final report in June.