(Attachment 2)
Progress of the Chiang Mai Initiative
1. Circumstances
In order to prevent a future crisis such as the Asian Currency Crisis in 1997, discussions have been held to enhance regional financial cooperation in Asia among ASEAN +3 (China, Japan, and the Republic of Korea) countries so that their future prosperity may be secured.
| Nov-1999 | The ASEAN + 3 Summit (in Manila) Agreed to the need to "enhance self-help and support mechanisms in East Asia through the ASEAN + 3 Framework" |
|
May-2000 |
The ASEAN + 3 Finance Ministers Meeting (in Chiang Mai, Thailand) Agreed to the "Chiang Mai Initiative" (CMI), the establishment of a network of bilateral swap arrangement facilities |
|
Nov-2000 |
The ASEAN + 3 Summit (in Singapore) Reported on the progress of the CMI, including agreements on the basic framework for the bilateral swap arrangements |
Since that time, the ASEAN+3 countries have continued to discuss how to work towards the materialization of the CMI.
2. Basic mechanisms of the swap arrangements
In order to prevent a future crisis such as the Asian Currency Crisis in 1997, and to cope with such crises rapidly when they occur, a network of bilateral swap arrangements is to be established to provide short-term liquidity among ASEAN countries, China, Japan, and the Republic of Korea. The outline of the arrangements is as follows.
The swap arrangements shall supplement existing international financing facilities, including those provided by the IMF.
In principle, the financial assistance links to the IMF facilities. Up to 10 percent of the maximum amount of drawing could be provided without linkage with the IMF facilities.
The maximum amount of drawing under each arrangement will be determined by bilateral negotiation.
Disbursement will be made in a concerted way based on consultation among the swap-providing countries. A coordinating country will coordinate the consultation process.
3. Japan's bilateral swap arrangements (as of May 2001)
Japan has reached substantial agreements over the terms and conditions for the bilateral swap arrangement under the Chiang Mai Initiative with the following three countries:
| (1) | The Republic of Korea | |
| - | a dollar-won swap arrangement up to $2 billion, in addition to the existing $5 billion swap arrangement under the New Miyazawa Initiative | |
| (2) | Malaysia | |
| - | a dollar-ringgit swap arrangement up to $1 billion, in addition to the existing $2.5 billion swap arrangement under the New Miyazawa Initiative | |
| (3) | Thailand | |
| - | a dollar-baht swap arrangement up to $3 billion | |
| In addition to the above, there are two ongoing negotiations as follows. | ||
| (4) | China | |
| - | Negotiation is going on for a yen-renminbi swap arrangement | |
| (5) | Philippines | |
| - | Negotiation is going on for a dollar-peso swap arrangement | |
4. Summary of the ASEAN + 3 Finance Ministers Meeting in Honolulu
Mr. Seiichiro Murakami, Senior Vice Minister of Finance, reported on the progress of the CMI mentioned above at the ASEAN＋3 Finance Ministers Meeting held in Honolulu on May 9, 2001.
Reports were also given by Korea on the ongoing negotiations for bilateral swap arrangements between Korea and Japan, China and Thailand respectively, and by China on the ongoing negotiations for bilateral swap arrangements between China and Japan and Korea respectively.
In the Joint Ministerial Statement issued after the Meeting, it was confirmed that the ASEAN+3 countries would continue to work towards concluding bilateral swap agreements among member countries.