Far East set to double currency swap accord
TOKYO - Agence France-PresseJapan and 12 other Asian countries will likely agree to double the amount of funds available under a regional currency swap pact amid uncertainty over the European debt crisis, a report said yesterday.
Japan, China, South Korea and the 10 members of the Association of Southeast Asian Nations (ASEAN) are to agree to double the fund from the current $120 billion this month, Japan’s Nikkei daily reported, citing unnamed sources.
The currency swap deal, known as the Chiang Mai Initiative, is designed to prevent a financial crisis in countries with relatively small foreign exchange reserves by giving them a safety net against future liquidity shortages.
Currently, up to 20 percent of the $120 billion in available funds can be used without linkage to loans by the International Monetary Fund.
The so-called ASEAN+3 countries are also expected to agree to raise this percentage significantly to prevent the European debt crisis from causing major damage in Asia, the Nikkei said.
The countries are expected to reach a broad agreement on strengthening the functions of the Chiang Mai Initiative at a meeting of senior finance officials in Cambodia at the end of this month, it said.
The agreement is expected to be finalized in May at a meeting of finance ministers and central bank governors from the ASEAN+3 countries, it said.