KARACHI, May 3: Heads or deputy heads of 11 Asian central banks will meet in Lahore on May 16-17. Eight of them, members of the Asian Clearing Union (ACU), will interact with each other at the 34th annual meeting, while three will participate as observers. Later on, head of Reserve Bank of India, Dr Y.V. Reddy will deliver a lecture on “reforms in the Indian banking industry” at the Institute of Bankers Pakistan in Karachi on May 18.

State Bank chief spokesman Syed Wasimuddin confirms that Pakistan, being a member of the ACU, will host this year’s meeting of the ACU, adding that SBP Governor Dr Ishrat Husain will be in the chair. Heads or deputy heads of the central banks of other seven nations of the ACU — Bangladesh, Bhutan, India, Iran, Myanmar, Nepal and Sri Lanka — will also participate. ACU members host annual meetings on rotation basis. Last year, the ACU annual meeting was held in Iran. Pakistan had last hosted the ACU meeting in 1998.

The special feature of this year’s meeting is that heads or deputy heads of central banks of Afghanistan, Iraq and Maldives are also attending the meeting as observers. The holding of this year’s meeting in Pakistan provides it with the opportunity of sharing its post-1998 economic progress and advances made in monetary management and central banking with seven fellow nations including India, the second largest economy in Asia after China. It will also provide Pakistan an opportunity to tell the heads of central banks of Afghanistan and Iraq that it can help them in training central bankers and providing them a helping hand in laying down a proper monetary management system.

That the two war-torn countries need to establish a proper monetary management system to steer their economies out of the crisis can be hardly overemphasised. The Asian Clearing Union is the simplest form of payment arrangements whereby the members settle payments for intra-regional transactions among the participating central banks on a multilateral basis. Its main objectives are: to provide a facility to settle on a multilateral basis for current international transactions among the participants; promote the use of participants’ currencies in current transactions between their respective territories and thereby effect economies in the use of the participants’ exchange reserves; promote monetary cooperation among the participants and closer relations among their banking systems; and provide for currency swap arrangement among the participants to make the Asian Monetary Unit (AMU) available to them for the time being.

Accounts of the ACU are held in a common unit of account named AMU. The value of one AMU is equivalent to a US dollar. At present the following central banks are participants of the ACU: Bangladesh Bank, Royal Monetary Authority Bhutan, Reserve Bank of India, Bank Markazi Jamhouri Islami Iran, Central Bank of Myanmar, Nepal Rastra Bank, State Bank of Pakistan and Central Bank of Sri Lanka. During January-March 2005, total transactions channelled through the ACU amounted to $1.771 billion.