An Asian monetary fund

From Thailand to South Korea, Asia is recovering, with at least one report saying the region is once again the fastest growing region in the world. Fast growth, however, is raising concerns that the problems that led to the economic crisis could return. Capital is again pouring in, some of it speculative -- the sort that turned tail at the first whiff of trouble at the start of the economic crisis in July 1997.

A few months after the Asian flu struck, Japan proposed the creation of an Asian monetary fund. The proposal, however, was immediately shot down by the United States, which saw the move as an attempt to supplant the Washington-based International Monetary Fund. Today, however, there are those who believe that many of the IMF's draconian prescriptions to Asia's ailing economies worsened the crisis. And Asian nations are initiating a collective move, including the creation of a regional monetary fund, to prevent a repeat of the worst post-war crisis to hit this part of the world. Although most of the details still have to be worked out, the agreement was made recently in Thailand by the 10-member Association of Southeast Asian Nations together with economic powerhouses Japan, China and South Korea. Under the currency protection agreement, the countries will meet speculative attacks and other currency jitters with currency swaps and repurchase schemes.

The agreement fell short of endorsing the sort of currency controls imposed in Malaysia by Prime Minister Mahathir Mohamad at the start of the currency crunch. Ridiculed for his response to the Asian flu, the pugnacious Mahathir ignored warnings that his move would exacerbate currency flight. It did not, Malaysia sustained minimal damage from the currency crisis, and the country is on the road to recovery. The move made economic experts sit up, and prompted the IMF to concede last week that the currency controls weren't so bad after all.

Asian nations are also studying the Malaysian model to figure out if similar measures can be undertaken without driving away investments. The immediate task, however, is to flesh out the proposal for a regional monetary fund. With countries in the region racing toward recovery, Asia must move fast, before another crisis whips the region like a tsunami.