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As an Asian star burns out, his economic lessons live on

News that Rafael Buenaventura, the 68-year-old former Philippine central bank governor, lost his bout with cancer last month has me thinking fondly of the dozen or so times I sat in his office, soaking up the wisdom of a man who was a source of inspiration and stability for many of his nation's 87-million people.

Asia, too. In 2003, Business Week named him one of the "Stars of Asia." The magazine lauded Buenaventura for having "kept economic discipline intact" in a nation often called the Argentina of Asia on account of its checkered past with making good on bond payments.

At the central bank, Buenaventura worked to create a revolution. It aimed to improve transparency in an economy notorious for its absence at all levels: government, central bank and commercial banks.

Yet Buenaventura's real accomplishment was being what one of Asia's more fragile and geopolitically important economies needed most: an adult in the room.

As vested interests fought against changing a system from which they benefit handsomely, Buenaventura did what he could to be the glue holding together Asia's 14th-biggest economy. He didn't always succeed, yet Buenaventura's steadiness calmed investors tempted to flee a nation plagued by corruption, mismanagement and the occasional coup attempt.

What can other central bankers learn from his six years running Bangko Sentral ng Pilipinas?

The first lesson: Central bankers must be independent. In a region where central banks tend to help governments pump up growth with ultra-low interest rates, Buenaventura proved to be a maverick. He was even suspended in 2003 for several months for daring to close a bank that was unable to meet withdrawals by depositors worried by financial problems.

A truly autonomous monetary authority that doesn't need to run for re-election or settle political scores draws favorable attention to any economy.

A second lesson from Buenaventura's tenure is the merit of unconventional thinking. One of his major successes was lobbying for a law approved in January 2003 that gave banks tax breaks to sell bad loans and seized assets. The ratio of defaulted loans has dropped by half to 7.4 percent, and today the Philippine economy is better off for it.

A third lesson: Don't buy into the government's hype. It was always refreshing to chat with Buenaventura after a few days of making the rounds with government officials. When you would ask him about all the ooh-rah-rahs coming from politicians, he would roll his eyes before setting you straight.

Monetary officials in Asia too often seem to view themselves more as economic cheerleaders than managers. Buenaventura knew the best way to impress investors was to keep his head down, and do a transparent and steady job. Markets eventually will notice.

No doubt there are many other lessons Asians could learn from one of the region's best - and sadly, unheralded - thinkers. Gov. Buenaventura may be gone; thankfully, the ideals for which he lived aren't and will gain traction in the years to come.

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