*
Japan to propose strengthening swap lines at ASEAN+3
meeting
*
ASEAN+3 finance chiefs to meet in Incheon on Tuesday
*
China's rebound to underpin Asian growth, inflation risk
lingers
(Adds BOJ announcement of governor attending the meetings)
By Tetsushi Kajimoto and Leika Kihara
TOKYO, April 28 (Reuters) - Asian finance leaders
gathering in South Korea next week will likely debate ways to
beef up safeguards against market turbulence, as global banking
sector woes and fears of recession in advanced economies cloud
the economic outlook.
The impact of U.S. interest rate hikes on the region's
capital flows may also be discussed when finance ministers and
central bank chiefs of ASEAN+3 - which groups the Association of
Southeast Asian Nations (ASEAN) plus Japan, China and South
Korea - meet on Tuesday.
Japan, which co-chairs with Indonesia this year's meeting of
ASEAN+3 nations, hopes to discuss the idea of strengthening
currency swap lines known as Chiang Mai Initiative
Multilateralisation (CMIM), Finance Minister Shunichi Suzuki
told a news conference on Friday.
"It's not as if we're heading into a major crisis now,"
Suzuki said. "Even so, we must prepare for the worst."
Japan is keen to propose a facility that enhances usage of
existing currency swap lines, and allows members to tap funds in
times of emergencies such as pandemics and natural disasters,
said three sources with direct knowledge of the matter.
Suzuki said he plans to attend the ASEAN+3 meeting on
Tuesday, to be held on the sidelines of the Asian Development
Bank's (ADB) annual meeting in Incheon in South Korea next week.
The Bank of Japan also said its Governor Kazuo Ueda will
travel to Incheon on May 1-4 to attend the meetings.
The recent failures of two U.S. banks have heightened alarm
among policymakers about vulnerabilities in the global banking
system and potential market turbulence that could re-emerge from
aggressive U.S. interest rate hikes.
While Asian policymakers stress their countries have
sufficient foreign reserves and buffers to fend of another
crises, they may see scope to make enhancements to existing
arrangements to combat potential market upheaval, analysts say.
In a report released earlier this month, the ADB projected
developing Asia to achieve economic growth of 4.8% in 2023, more
than its pervious estimate of 4.6% in December and faster than a
4.2% growth in 2022, thanks to China's projected rebound.
But some central banks in the region, such as Australia,
have begun pausing interest rate hikes as they saw their
economies and jobs growth moderate from the impact of global
headwinds and past monetary tightening.
The International Monetary Fund has urged Asian central
banks to keep monetary policy "tighter for longer" to combat
still substantial inflation risks.
(Reporting by Leika Kihara; Editing by Sam Holmes)