ASEAN+3 to double currency swap pool to $240 billion

Speaking at the Asian Trade Promotion Forum CEO Meeting in Bangkok, Asean secretary-general Surin Pitsuwan said the Asean+3 countries had agreed on increasing financial security in the region to tackle the uncertainty in the global economy.
“The plan is to double the regional currency-swap pool from the current $120 billion to act as a buffer amid uncertainties over the European debt crisis. The increase in the fund will ensure that the region, which is now a major centre of growth in the global economy, will be able to handle any unexpected situation if a financial crunch occurs,” Surin said.
He said the finance ministers of Asean states, China, South Korea and Japan would officially release a Joint Ministerial Statement on the progress in implementing Asean+3 cooperative initiatives and policy directions towards achieving financial stability in the region during their annual meeting in Manila.
The agreement will be proposed at the Asean Leaders Summit to be held in Phnom Penh late this year so that leaders will sign on to the agreement and take action.
Finance ministers of the member states will also outline how each country will contribute to the increase in the fund. Asean and South Korea contributed 20 per cent each to the initial capital fund of $120 billion, while China and Japan each contributed 30 per cent.
Surin said that although the fund was low compared with the euro fund of $1 trillion, it should be adequate to guarantee that the region will have the funding to help its member states and prevent a financial crunch.
To ensure efficient operation of the fund, the Asean+3 members have opened an office in Singapore to monitor the financial status of each member.
The currency-swap scheme known as the multilateral Chiang Mai Initiative was launched in 1997-98 during the economic crisis that started in Thailand. The initiative was established as a crisis-resolution facility in countries with relatively small foreign-exchange reserves by providing them a safety net against liquidity shortages.
The Asean chief also called on the 21 states in East Asia to enhance self-help and support mechanisms in the region through dialogue and cooperation in many frameworks.
He said the region needed to promote the growth of small and medium-sized enterprises, as they are the keys for strong global economic growth.
SMEs account for more than 90 per cent of Asian enterprises.