Caixin
Mar 25, 2010 05:45 PM

Asian Countries Launch Currency Swap Pact

[Click for Chinese Version]

(Caixin Online) A currency swap agreement between Southeast Asian countries, China, Japan, South Korea came into effect on March 25, according to a statement posted on the website of the People's Bank of China.

The US$ 120 billion Chiang Mai Initiative Multilateralization agreement is aimed to provide emergency financial support to the participant countries troubled by liquidity shortages, according to the statement.

The agreement was signed last December by the finance ministers and central bank governors of the ASEAN members, China, Japan and South Korea, as well as the Hong Kong Monetary Authority chief. It is a multilateral extension of a network of bilateral swaps reached after the 1997-1998 Asian financial crisis.

Under the CMIM agreement, China, Japan, South Korea, and the ASEAN countries will be able to swap their currencies with U.S. dollars from the regional reserve pool, the statement said.

China and Japan each contributed US$ 38.4 billion to the pool and South Korea offered US$ 19.2 billion. The ASEAN nations provided a combined US$ 24 billion, according to the statement.

The ASEAN member countries are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

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