Asean+3 to double Chiang Mai initiative safety net to $240B

MANILA, Philippines - Finance ministers and central bank heads of the 10-member Association of Southeast Asian Nations (ASEAN) along with China, South Korea and Japan or the so-called ASEAN + 3 yesterday met in Manila for its 15th annual meeting and agreed to double the amount of the group’s regional currency swap pool, known as the Chiang Mai Initiative Multilateralisation (CMIM) to $240 billion from the current $120 billion.

“We all committed to strengthening the CMIM as a part of the regional financial safety net and unanimously agreed to double the total size of the CMIM from $120 billion to $240 billion,” the group said in a joint statement.

Doubling the fund would provide ASEAN + 3 member countries a buffer amid uncertainties over the European financial crisis.

The meeting was held on the sidelines of Manila 2012, the 45th Asian Development Bank (ADB) Board of Governors annual meeting which opened in Manila on Wednesday.

The currency swap scheme known as the Chiang Mai Initiative took effect on March 24, 2010 during an ASEAN+3 Finance Ministers Meeting. The initiative was established as a crisis resolution facility in countries with relatively small foreign exchange reserves by giving them a safety net against liquidity shortages.

Finance Secretary Cesar Purisima has said the cooperation of ASEAN +3 member countries are important in pushing the growth of the region.

He also said the Philippines can hitch a ride on the growing economy in the region.

“It’s important to note that the Philippines will have the second largest population in an integrated population in the Asean and probably the most mobile,” he said.

The ASEAN+3 meeting will also serve as a venue for the economic ministers to exchange views on economic and financial policy issues in East Asia and other issues of mutual interest. The ASEAN+3 economic ministers are also expected to tackle issues on the region’s banking and finance, financial and capital markets; customs; insurance and taxation; and public finance.

The ministers and the central bankers will release a Joint Ministerial Statement on the progress of implementation of ASEAN+3 cooperation initiatives and policy directions towards achieving financial stability in the region.

After the Asian financial crisis in the late 90’s, East Asian countries realized the need to promote regional financial cooperation. At the ASEAN+3 Summit in November 1999, the ASEAN+3 Leaders agreed to strengthen policy dialogue, coordination and collaboration on financial, monetary and fiscal issues of common interest.

The economic ministers also focused initially on issues related to macroeconomic risk management; enhancing corporate governance; monitoring regional capital flows; strengthening banking and financial systems; reforming the international financial architecture; and enhancing self-help and support mechanisms in East Asia through the ASEAN+3 framework, including the ongoing dialogue and cooperation mechanism of the ASEAN+3 finance and central bank leaders and officials.