24 October 2008

Quite tiptoe from US dollar

BEIJING, Oct 24 (Reuters) - East Asian nations will move to form an $80 billion currency swap scheme by the first half of 2009 to fight the global financial crisis and to launch a regional surveillance agency, according to a statement on Friday.
The agreement would give to any of the signatory nations access to a foreign exchange reserves pool of at least $80 billion in the event of a financial emergency.
Thirteen Asian economies, comprising a so-called ASEAN+3 group, agreed in May to upgrade the swap scheme, taking them a step closer to creating a full-scale Asian monetary fund, which has gained support in the region as the financial sector turmoil dampens Asian growth.
"Leaders at the meeting shared the need of stepping up regional cooperation to cope with the global financial crisis and to coordinate policies," South Korea's presidential office said in the statement.
"We agreed to strengthen Asia's role by aggressively participating in international collaboration through multilateral cooperation systems... and to speed up cooperation to complete formation of the fund by the first half of next year."
Leaders of the Association of Southeast Asian Nations (ASEAN), grouping 10 Southeast Asian nations, held a breakfast meeting of ASEAN+3 with China, Japan and South Korea, just ahead of the Oct 24-25 Asia-Europe summit (ASEM) in Beijing.
The swap fund initiative will replace the existing arrangement of mainly bilateral currency swaps, called the Chiang Mai Initiative (CMI), and create a more powerful self-managed reserve pooling mechanism governed by a legally binding single contract. [ID:nLN454107]
South Korea, China and Japan had agreed to provide 80 percent of the total, with ASEAN taking the remainder. They are discussing each country's contribution ratio and how to manage it.
ASEAN groups Cambodia, Malaysia, Indonesia, Singapore, Vietnam, Philippines, Laos, Thailand, Myanmar and Brunei.
The ASEAN+3 nations also agreed to work together to form a monitoring organisation that would step up surveillance of the region's economies, the statement added.
Asian countries have been considering measures to insulate themselves from the financial crisis, amid doubt about roles of global monitoring agencies in dealing with Asian crises.
Separately, South Korean President Lee Myung-bak told the ASEAN+3 meeting that future discussions to reform international financial systems needed to reflect the interests and positions of emerging economies.
"Lee also called on expansion of a multilateral coordination regime, which has been in discussion, to include emerging economies, taking into consideration their economy size and development experiences," the statement said.
The world's eight major countries, including Russia, have been leading the coordination regime.

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