U.S. Pushes Plan to Prevent More Asia-Type Crises

The Clinton administration, taking its first step toward bolstering the international monetary system to help prevent more Asian-style financial crises, called in finance ministry officials from 21 countries Tuesday to launch discussions on possible change.

Officials said no decisions were made at the closed-door session. Rather, the U.S.-led meeting was intended to pave the way for further discussions at a gathering of finance ministers in London this weekend and a formal review of the situation at a larger meeting here in April.

U.S. Treasury Secretary Robert E. Rubin laid down a wide-ranging set of issues for the delegates to consider, from bolstering financial management in developing countries to prodding banks into taking a bigger share of any losses.

The developments came as the International Monetary Fund disbursed another $2-billion installment of its $21-billion loan to South Korea, signaling widespread approval by the United States and its economic allies over the way Seoul is dealing with its financial problems.

Both U.S. and foreign officials said they were generally pleased with Tuesday’s meeting on bolstering the global financial system. The gathering has already been dubbed “the Willard group” because the officials met at the Willard Hotel, a block from the U.S. Treasury Department.

Deputy Secretary Lawrence H. Summers, who chaired the session, said the administration was “very encouraged” by support among delegates--particularly for requiring more openness by governments and businesses in providing accurate financial data.

“There was common agreement that we face in Asia a new [kind] of crisis” in which governments must deal with the erosion of confidence in financial markets, Summers said.

The agenda Rubin outlined for the group contained these major elements:

* Heightened public disclosure of financial data by businesses and governments so that markets receive early warning of potential problems in time to prevent the kinds of large, sudden swings in currency and stock values that sent many Asian economies reeling.

* Forcing commercial banks and other investors to shoulder some of the losses when the IMF or industrialized countries bail out a developing country whose investors cut and run from imprudent deals.

* Measures to improve the efficiency of global capital markets.

* Strengthening the financial systems in emerging markets, both by tightening regulation of banks and by providing for deposit insurance to protect ordinary citizens.

* Clarifying the role the IMF and the major industrialized nations should play in rescuing countries from financial crises.

Summers said later that the delegates agreed that the IMF is “indispensable” to dealing with financial crises and should not be dismantled, as some critics have suggested. But he said they also believe the IMF should learn from mistakes made in Asia.

Reaction from other delegates appeared to be favorable. Duck Koo Chung, South Korea’s deputy minister for international affairs, told reporters that the officials had “detected many a possibility for negotiation later on.”

The participants included deputy finance ministers from the seven major industrialized nations--the United States, Britain, France, Germany, Japan, Italy and Canada--and from Russia and Australia.

Also attending were officials from several major “emerging-market” countries--Mexico, Argentina, Brazil, Poland, South Africa, China, South Korea, Hong Kong, Singapore, Thailand, Malaysia, Indonesia and India.