ASEAN, China, Japan, S.Korea Agree on Currency Swap

ASEAN, China, Japan, S.Korea Agree on Currency Swap

Finance ministers of the ASEAN, China, Japan and South Korea agreed in Chiang Mai Saturday on a bilateral currency swap to strengthen regional capacity to counter future financial crisis.

"In order to strengthen our self-help and support mechanism in East Asia through the ASEAN''3 framework, we recognize a need to establish a regional financing arrangement to supplement the existing international facilities," said the joint ministerial statement of the meeting issued at a press conference.

The meeting was held on the sidelines of the 33rd Annual Meeting of the Board of Governors of the Asian Development Bank.

"As a start, we agreed to strengthen the existing cooperative frameworks among our monetary authorities through the 'Chiang Mai Initiative,'" said the statement.

The initiative involves an expanded ASEAN Swap Arrangement and a network of bilateral swap and repurchase agreement facilities among ASEAN countries, China, Japan and South Korea.

To further sustain the stronger-than-expected recovery in the region, the ministers agreed to strengthen their policy dialogues and regional cooperation activities in the areas of capital flows monitoring, self-help and support mechanism and international reforms.

They also agreed to use the ASEAN''3 framework to facilitate the exchange of consistent and timely data and information on capital flows.

The ASEAN Secretariat was requested to lead and coordinate a study on other appropriate mechanisms that could enhance the group 's ability to provide sufficient and timely financial support to ensure financial stability in the East Asian region.

An analyst said the Chiang Mai Initiative symbolizes that the regional economic and financial cooperation has entered a new stage.

The ministers also welcomed the stronger-than-expected recovery of the member economies and agreed to further sustain economic growth and strengthen policy dialogues and regional cooperation activities, said the statement.

At the second informal meeting of the ASEAN''3 held in December 1998 in Hanoi, Chinese Vice President Hu Jintao proposed to hold a meeting of the ASEAN''3 finance and central bank deputies.

At the third informal meeting of the ASEAN''3 leaders held in Manila last November, Chinese Premier Zhu Rongji suggested that the meeting be institutionalized to discuss issues concerning the regional economic and financial cooperation.

He also suggested that an ASEAN''3 finance ministers' meeting be held consequently as appropriate.

The proposal received positive responses from the Association of Southeast Asian Nations (ASEAN), Japan and Korea.

It was against this background that the ASEAN''3 finance ministers' meeting was convened.