Xinhua, Bangkok
Senior finance and central bank officials of the Asean Plus Three (10+3) at a meeting in Thailand have agreed member countries to pool their reserves into a regional fund to curb currency fluctuation, Thai media reported Thursday.
At Wednesday's Asean (Association of Southeast Asian Nations) Plus Three Finance and Central Bank Deputies' Meeting held in northern Thai province Chiang Mai, financial policymakers from the regional group had discussed various measures to upgrade the bilateral swap agreement in the existing Chiang Mai Initiative into a multilateral pact to boost the short-term liquidity to strengthen financial positions of member countries, Thai News Agency reported.
The Chiang Mai initiative was developed in 1999 at the urging of Thailand to develop mechanisms to better tap regional resources to avoid a repeat of the 1997 financial crisis. Under the initiative, each member country in the Asean Plus Three group has sought a partnership to make a bilateral swap deal. At present, an amount of about 80 billion US dollars are involved in the existing 16 bilateral swap deals.
Asian countries have struggled to keep their currencies stable in the face of a weakening US dollar and more volatile capital flows into the region. Many countries have intervened heavily in currency markets and allowed their foreign reserves to rise sharply in a bid to keep their currencies from appreciating to protect their export competitiveness.
Under the new multilateral pact, member countries will pool surplus reserves through a fund established to supervise the movement of regional currencies to ensure they are not affected by the fluctuation in the money market in the face of the weakening dollar and large capital inflows into the region.
In particular, when member countries experience an economic crisis, they could seek help from the fund.
But whether the pooled surplus reserves could be counted as international reserves of member countries needs a discussion with the International Monetary Fund first. The approach would be proposed for endorsement at the meeting of Asean Plus Three Finance Ministers in Kyoto, Japan on May 5.
The Asean Plus Three group comprises 10 Asean members including Indonesia, the Philippines, Brunei, Malaysia, Singapore, Thailand, Vietnam, Laos, Cambodia, and Myanmar, plus three dialogue partners namely China, Japan and South Korea.
At Wednesday's Asean (Association of Southeast Asian Nations) Plus Three Finance and Central Bank Deputies' Meeting held in northern Thai province Chiang Mai, financial policymakers from the regional group had discussed various measures to upgrade the bilateral swap agreement in the existing Chiang Mai Initiative into a multilateral pact to boost the short-term liquidity to strengthen financial positions of member countries, Thai News Agency reported.
The Chiang Mai initiative was developed in 1999 at the urging of Thailand to develop mechanisms to better tap regional resources to avoid a repeat of the 1997 financial crisis. Under the initiative, each member country in the Asean Plus Three group has sought a partnership to make a bilateral swap deal. At present, an amount of about 80 billion US dollars are involved in the existing 16 bilateral swap deals.
Asian countries have struggled to keep their currencies stable in the face of a weakening US dollar and more volatile capital flows into the region. Many countries have intervened heavily in currency markets and allowed their foreign reserves to rise sharply in a bid to keep their currencies from appreciating to protect their export competitiveness.
Under the new multilateral pact, member countries will pool surplus reserves through a fund established to supervise the movement of regional currencies to ensure they are not affected by the fluctuation in the money market in the face of the weakening dollar and large capital inflows into the region.
In particular, when member countries experience an economic crisis, they could seek help from the fund.
But whether the pooled surplus reserves could be counted as international reserves of member countries needs a discussion with the International Monetary Fund first. The approach would be proposed for endorsement at the meeting of Asean Plus Three Finance Ministers in Kyoto, Japan on May 5.
The Asean Plus Three group comprises 10 Asean members including Indonesia, the Philippines, Brunei, Malaysia, Singapore, Thailand, Vietnam, Laos, Cambodia, and Myanmar, plus three dialogue partners namely China, Japan and South Korea.
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