By Xinhua,
Madrid : Finance ministers of China, Japan and South Korea took one step further on Sunday towards a regional foreign exchange reserve swap arrangement.
“We reached an agreement on several key elements of the CMI Multilateralization,” finance chiefs of the three East Asian countries said in a joint statement after they met on the sidelines of an annual meeting of the Asian Development Bank (ADB).
CMI, or the Chiang Mai Initiative, is a regional financing arrangement agreed by finance ministers of ASEAN (Association of Southeast Asian Nations), China, Japan and South Korea in 2000 to prevent a recurrence of the 1997-1998 Asian financial crisis.
Under the scheme, the central banks of participating countries can swap foreign exchange reserves to counter speculative moves on their currencies.
CMI Multilateralization is the next step, as has been agreed at the last finance ministers’ meeting of ASEAN and three East Asian countries in Japan’s Kyoto last year, which would be moving from the bilateral system to a multilateral one.
The proposal holds that by setting up a common pooling reserve, in which each country would input an amount of foreign exchange reserve under a single agreement, any country in the framework could draw from the fund to cope with short-term liquidity difficulties.
“We agree to further expedite our efforts to reach consensus on all of the elements of CMI Multilateralization, particularly through the enhanced internal discussion among the three countries,” the statement said.
Shin Je-yoon, vice finance minister of South Korea, told reporters after the meeting that the pool would be upgraded to at least 80 billion U.S. dollars, with 80 percent of the amount to be contributed by Japan, China and his country.
A broad deal was expected to be agreed when finance ministers of China, Japan and South Korea are joined later today by their counterparts from the 10 member countries of the ASEAN, the so-called ASEAN+3 framework.