[I think this mean that the United States, Canada, Australia, the UK, and whoever else are going before the Asian countries so this will cover all their immediate needs until then! Tony]
Asia to Launch Currency-Swap Facility in March
DECEMBER 29, 2009
By KANGA KONG
Asean [Association of Southeast Asian Nations] and its three regional partners will launch a $120 billion currency-swap facility on March 24 that aims to ensure sufficient U.S. dollar liquidity in the event of a financial crisis.
The new pact is an upgrade of the existing Chiang Mai Initiative, which was launched in 2000 by the Association of Southeast Asian Nations plus Japan, China and South Korea. That came after regional countries experienced severe capital flight in the wake of the 1997-1998 Asian financial crisis.
As reported in May, the size of the fund will be expanded to $120 billion from $78 billion. The funds will now be available to all Asean countries plus its three partners, with Hong Kong also participating in the arrangement for the first time. Asean comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
In contrast to the Chiang Mai Initiative’s previous bilateral format, the new pact is a multilateral agreement, with participating countries pooling funds from their foreign-exchange reserves.
“The core objectives…are to address balance of payment and short-term liquidity difficulties in the region, and to supplement existing international financial arrangements,” the countries said in a joint statement released by the South Korean government.
Most of the participating nations completed the signing on Dec. 24, with the pact to take effect 90 days later, Seoul’s Ministry of Strategy and Finance said Monday.
Japan and China, including Hong Kong, will each contribute $38.4 billion, or 32% of the total. South Korea will provide $19.2 billion, or 16%.
Under the agreement, finance ministers and central bank governors of the nations and the Hong Kong Monetary Authority will help ensure emergency funds in U.S. dollars for up to 90 days, in return for a premium above the London interbank offered rate. Funds will be provided within a week of a request, and the loans may be extended up to a total of 720 days [It has been said that it could take up to two years to implement NESARA].
Japan, China and South Korea will be able to tap as much as $19.2 billion each from the pool, while some of the other countries can borrow as much as five times their contributions, according to the Korean statement.
Any participating country that wants to use the pool can borrow as much as 20% of the funds allowed for it under non-crisis conditions. The remaining 80% can be tapped only when conditions have become so grave that the country asks for an International Monetary Fund bailout, said Ahn Buyng-chan, a director-general at the Bank of Korea.
To further bolster regional financial stability, the participating nations also will set up a regional surveillance unit and a facility to provide credit guarantees on bonds issued in the region, the statement said.
—In-Soo Nam in Seoul and Li Liu in Beijing contributed to this article.
ASEAN+3, HK sign Chiang Mai Initiative to address currency liquidity
BEIJING, Dec. 28 (Xinhua) — Top finance officials of a block of nations and regions in east and southeast Asia signed the Chiang Mai Initiative Multilateralization (CMIM) to address the short-term currency liquidity, China’s central bank said on its website on Monday.
The agreement was signed by the finance ministers and central bank governors of the Association of Southeast Asian Nations (ASEAN), China, Japan and the Republic of Korea (ASEAN+3), as well as the Hong Kong Monetary Authority chief.
The signatory nations and regions reached in May the agreement on all main components of a 120-billion-U.S. dollar regional reserve pool to provide emergency liquidity for countries and regions in financial crisis.
The core target of the pact was “to address balance of payment and short-term liquidity difficulties in the region and to supplement the existing international financial arrangements”, the central bank said in the statement.
China and Japan will contribute 38.4 billion U.S. dollars each to the liquidity pool and the Republic of Korea will offer 19.2 billion U.S. dollars. The 10 ASEAN nations will provide a combined 24 billion U.S. dollars.
The ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
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