Chiang Mai Agreement

Critics expressed concern that deepening regional integration could ultimately supplant international institutions in the region and isolate extra-regional states. In addition, the Asian financial crisis of 1997/98 showed that the region was vulnerable to economic contagion, indicating that liquidity should come from outside the region and not from within. Nevertheless, the Chiang Mai Agreement has fuelled the debate on deep cooperation in the future, such as the transformation of bilateral swap agreements into a genuine multilateral institution and the creation of a single Asian currency. At the MEETING of ASEAN finance ministers in Pattaya, Thailand, in April 2009, each member state`s individual contributions to the reserve pool were announced. Each of the original six ASEAN members – Indonesia, Malaysia, Singapore, the Philippines and Thailand – agreed to contribute $4.77 billion, while each of the remaining four members would contribute between $30 billion and $1 billion. [16] The ten countries were scheduled to meet with their partners after the meeting of finance ministers, but the cancellation of the summit due to the political crisis in Thailand delayed the launch of the multilateral agreement at a later date. [17] [18] When the heads of state and government of the thirteen countries finally met in Bali in May, they concluded the various contributions of China, Japan and South Korea. [19] At the summit, Hong Kong was also welcomed as a new participant, whose contribution was added to China, although Hong Kong remained “a separate monetary administration”. Its participation brought China`s total contribution to $38.4 billion, which is in line with that of Japan and South Korea, which agreed to contribute $19.2 billion. [Citation required] China and Japan remain the largest contributors, each contributing 32% of total financial contributions. Including Korea, these three countries account for 80% of all contributions to CMIM, while the remaining 20% come from ASEAN countries. [20] On 3 May 2012, the 15th meeting of ASEAN-3 finance ministers and central bank governors was held in Manila, Philippines, at which an agreement was reached to extend CMIM from the current $120 billion to $240 billion.

ASEAN-3 also approved the adoption of the CMIM Precautionary Line (CMIM-PL), modelled on the IMF`s PPL programme to avert the financial crisis. In addition, the IMF`s share of the IMF will increase from 20 per cent to 30 per cent and will increase with its future target of reaching 40 in 2014. With regard to the expanded financing of CMIM, countries can now receive up to $30 billion. [21] At the height of the 1997 Asian financial crisis, the Japanese authorities proposed an Asian Monetary Fund to serve as a regional version of the International Monetary Fund (IMF). But the idea was put on hold after strong opposition from the United States. [4] In the wake of the crisis, Finance ministers of members of the Association of Southeast Asian Nations (ASEAN), the People`s Republic of China, Japan and South Korea met on 6 May 2000 for the 33rd annual meeting of the Asian Development Bank (AfDB) Governing Council in Chiang Mai, Thailand, to discuss the creation of a network of bilateral currency agreements. [5] The proposal was dubbed the Chiang Mai Initiative and was designed to prevent a recurrence of the Asian financial crisis in the future. It also involved the possibility of setting up a pool of foreign exchange reserves accessible by participating central banks to combat monetary speculation. [6] The proposal would also supplement the financial resources of international institutions such as the IMF.

[7] [8] The Joint Ministerial Declaration (JMS) was issued after the meetings of ASEAN-3 finance ministers mentioned the evolution of the IJC. [9] The swap system consists of two main elements: an expanded ASEAN swap agreement and a network of bilateral swap and pension transactions.