FINANCIAL cooperation among East Asian countries should be expanded with growing bilateral currency swaps or even a unified currency like the European Union's euro in the long run, experts told a conference in Shanghai over the weekend.

"A bigger bilateral currency swap size, a boost for regional bond markets and monetary cooperation are my main suggestions for East Asian countries' financial cooperation," said Wu Jianmin, president of China Foreign Affairs University, at the Network of East Asian Think Tanks Conference on East Asian Financial Cooperation.

So far, the bilateral currency swap size has topped US$80 billion and the figure may top US$100 billion next year as a very "realistic" aim, Wu said, who is also NEAT's Co-Interim Coordinator.

The bilateral currency swap agreement is increasing under the Chiang Mai Initiative, with 17 deals being signed so far, said Li Yong, vice minister of the Ministry of Finance.

"The dominance of indirect financing is one problem concerning the East Asian financial sector," Li said.

China has made efforts to boost its assets-backed securities to diversify its financial market. China Development Bank has launched credit-backed securities for 4.18 billion yuan (US$542 million), while China Construction Bank has issued mortgage-backed securities worth 3.02 billion yuan.

Now a multilateral currency swap system is under study by various sides, Li said.

The 1997 Asian Financial Crisis pushed East Asian countries to set up a regional system to improve regional protection against disruptive capital flows and maintain exchange rate stability.

Wu suggested an East Asian foreign currency reserve fund for cooperative purposes, which is likely to be formed by 2015.

Makoto Utsumi, president and chief executive officer of Japan Credit Rating Agency, also suggested a currency system similar to EU's euro in the long run, though the process may take a long time.