ASEAN+3 vows to strengthen regional financial cooperation

MANILA — The 10 member states of the Association of Southeast Asian Nations (ASEAN) joined by China, South Korea and Japan (ASEAN Plus Three) have agreed to further strengthen the multilateral currency swap arrangement to enable members overcome crisis more speedily and promote sustained economic growth.

In a joint statement of the 21st ASEAN+3 issued at the Asian Development Bank (ADB) annual meeting here, ASEAN+3 Finance Ministers and Central Bank Governors said they have decided to enhance the conditionality framework of Chiang Mai Initiative Multilateralisation (CMIM), in addition to the existing one for crisis prevention.

They said a general agreement has been reached on the main contents of the first CMIM Periodic Review to add an overarching legal basis for conditionality as an application provision for crisis resolution.

CMIM, a multilateral currency swap arrangement, aims to address potential and actual balance of payments (BOP) and short-term liquidity difficulties in the region; and supplement existing international arrangements.

“It is expected that the CMIM may further support members by helping in the design and implementation of appropriate economic and financial policies, which in turn can make members overcome a crisis more quickly and settle on a sustainable path of economic growth,” said ASEAN+3.

They have also agreed to improve the CMIM financing terms in order to strengthen their support for members.

Specifically, the length of the CMIM supporting periods has been made flexible by increasing the maximum number of renewals from two times to multiple times if and when necessary in the case of the International Monetary Fund (IMF) Linked Portion.

“(This aims) to ensure that the CMIM remains up-to-date, and reflective of the member countries’ circumstances, as well as global economic and financial conditions,” they added.

ASEAN+3 Finance Ministers and Central Bank Governors thus urged the Deputies to prepare the final text of the amended CMIM Agreement within this year for signing “so that it can be executed at the earliest opportunity.”