Asean+3 finance ministers will today announce a decision to
multilateralise the management of the Chiang Mai Initiative
(CMI), a $75 billion network of bilateral currency swaps
created seven years ago to help ward off regional currency
This is a good move, and it will make Asia safer in the
longer run, ADB president Haruhiko Kuroda told Emerging
Markets in Kyoto.
Korean finance minister Kwon
Okyu also praised the decision. It becomes more
formalised, and provides a more systematic way to deal with any
future financial crisis, Kwon said in an interview with
Under the new system, if
there is a crisis, members countries are required to have a
meeting within two days and then they have to decide whether to
offer support [to crisis-hit countries] within two
Kuroda considers a currency
crisis like the one that caused economic turmoil in 1997 to be
very unlikely. But, he said, the situation could
change in future, and volatile inflows and outflows
of capital could challenge monetary authorities.
The region needs to safeguard against that possibility.
In five, ten or 15 years
time the financial and economic situation in Asia may be
different. If the Asean+3 finance ministers improve the
Chiang Mai Initiative safety net, that would mark
significant progress toward financial safety in the long
run, the ADB president said.
Multilateralising the CMI
would be significant progress over a network of bilateral
arrangements, added Kuroda. But he emphasised that this
would not turn the CMI into an Asian Monetary
Kuroda, a former deputy finance
minister for international affairs in Japan, is often credited
with devising the original plan for an Asian Monetary Fund at
the time of the regional currency crisis in 1997. That was
dropped in the face of strong opposition at the time, from then
US Treasury secretary Lawrence Summers and from the IMF.
The CMI was launched three years
later by Asean+3 finance ministers at the ADB meeting in the
Thai resort of China Mai. The network of bilateral swaps was
designed to provide emergency financial liquidity for Asian
countries hit by balance of payments crises, although it has
never been invoked.
Finance minister Kwon of Korea
had a trilateral meeting in Kyoto yesterday with his
counterparts Koji Omi of Japan and Jin Renqing of China, and
afterwards issued a statement welcoming progress of the
study toward an advanced framework of regional liquidity
support arrangement under the CMI.
We agreed further to
strengthen our efforts to explore ways for multilateralisation
of the CMI, while confirming our commitment to maintain the two
core objectives of addressing short-term liquidity difficulties
in the region and supplementing existing international
arrangements, they said.
The ministers also agreed to
promote other means of cooperation and regional financial
solidarity through the Asean+3 finance ministers
ADB president Kuroda said in his
interview that the report by a group of Eminent Persons on the
future of the ADB, which he commissioned last year, had been
generally well received by shareholders.
I have talked to finance
ministers and senior officials since the report was released
[one month ago] and almost all of them have a positive view
it, he said. He welcomed the groups clear
analysis of poverty and other challenges facing the