Minister: Asia's regional reserve pool close to being operational

16:47, October 23, 2009      

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The regional reserve pool among China, Japan, South Korea and the members of the Association of Southeast Asian Nations (ASEAN) are close to being operational, Thailand's Finance Minister Korn Chatikavanij said Friday on the sidelines of the ongoing ASEAN summit.

The ASEAN Plus Three finance leaders were expected to convene for the last time in November before the launch of the 120-billion-U.S. dollar Chiang Mai Initiative Multilateralization (CMIM), Korn said in an interview with Xinhua at the southern Thai beach resort of Hua Hin.

"We are almost there," he said when asked how far the reserve pool was from getting operational, adding that the answer would depend on how the word "operational" was defined.

The regional reserve pool will not be a major issue discussed at length at the ongoing ASEAN summit and related summits in Hua Hin, Korn said.

Nevertheless, the national leaders and senior economic officials at the summits are still expected to agree on speeding up preparation for the launching of the pool.

Prime Minister Abhisit Vejjajiva of Thailand, which currently assumed the rotating chairmanship of the ASEAN, said Friday at the summit that he "really hope(d) that this self-help mechanism can be launched by the end of the year."

In a sign of potential challenges facing the multilateral initiative, a press release issued on the start of preparatory meetings listed the launch of the reserve pool "by early next year" as one of the concrete outcomes expected to come after the ASEAN summits.

The CMIM is a multilateral self-aid mechanism designed to address short-term liquidity difficulties in the region and to supplement the existing international mechanism. It evolved from the bilateral currency swap schemes under the Chiang Mai Initiative (CMI) born in 2000 in the aftermath of the Asian financial crisis.

The ASEAN Plus Three dialogue partners agreed on "all the key components" of the foreign currency reserve pool at a meeting in Indonesia in May 2009, two years after the bilateral CMI mechanism was upgraded to a multilateral reserve pool.

The 120 billion U.S. dollars reserve under the CMIM will be pooled from the ASEAN Plus Three dialogue partners, with China and Japan each contributing 32 percent, South Korea contributing 16 percent and the ASEAN states, 20 percent.

The sense of emergency amid the latest global financial turmoil and economic downturn was believed to have spurred the work on launching the CMIM.

Such preparatory work will not slow down despite the reduced sense of emergency amid signs of economic recovery, Korn said.

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