Madrid: Finance ministers of 13 Asian nations agreed on 5 May to set up a foreign exchange pool of at least $80 billion to be used in the event of another regional financial crisis.
China, Japan and South Korea will provide 80% of the funds, with the rest coming from the 10 members of ASEAN, they said in a joint statement issued after talks on the sidelines of an Asian Development Bank meeting in Madrid.
The 13 nations agreed after the 1997-98 Asian financial crisis to set up a mainly bilateral currency swap scheme known as the Chiang Mai Initiative (CMI) to protect their currencies from turmoil in the future.
At the ADB’s last annual meeting in Japan in May 2007, they decided to set aside part of their foreign reserves for a multi-nation system of reserves for use in emergencies, but did not decide on the size of the pool.
“We are committed to further accelerate our work in order to reach consensus on all of the elements which include concrete conditions eligible for borrowing and contents of covenants specified in borrowing arrangements,” the statement said.
The foreign exchange pool would be self-managed and be governed by a single contract that will be legally binding, it added.
Vietnam’s Finance Minister Vu Van Ninh, who co-chaired the Madrid meeting, said the 13 nations would now work to develop a way of monitoring the fund.
“We think it is very important to have a rigorous surveillance system, especially in the context that regional economies have made an important and big integration into the world economy,” he told reporters.