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Japan's Financial Cooperation in Asia

Chiang Mai Initiative (CMI)

Objective

The Chiang Mai Initiative aims to create a network of bilateral swap arrangements (BSAs) among ASEAN+3 countries to address short-term liquidity difficulties in the region and to supplement the existing international financial arrangements.

Background

After the Asian financial crisis, East Asian countries shared the need to promote regional financial cooperation. At the ASEAN+3 Summit in November 1999, ASEAN+3 leaders agreed to enhance “self-help and support mechanisms in East Asia” through the ASEAN+3 framework. At the ASEAN+3 Finance Ministers’ Meeting in May 2000, finance ministers agreed to promote the Chiang Mai Initiative to establish a regional financial arrangement to supplement the existing international facilities. 

Network of BSAs under the CMIPDF

Total amount: US$64 billion (16 arrangements)
BSAs were concluded among eight countries: China, Indonesia, Japan, the Republic of Korea, Malaysia, the Philippines, Singapore, and Thailand.
Japan’s Bilateral Swap Arrangements (BSAs) under the Chiang Mai Initiative (CMI)

Recent Progress

At the 10th ASEAN+3 Finance Ministers’ Meeting in May 2007 (Kyoto, Japan), finance ministers unanimously agreed in principle that a self-managed reserve pooling arrangement governed by a single contractual agreement is an appropriate form of CMI multilateralisation, proceeding with a step-by-step approach. Finance ministers instructed the Deputies to carry out further in-depth studies on the key elements of the multilateralisation of the CMI including surveillance, reserve eligibility, size of commitment, borrowing quota and activation mechanism, while reiteratifng their commitment to maintain the two core objectives of the CMI, i.e., (i) to address short-term liquidity difficulties in the region and (ii) to supplement the existing international financial arrangements.
(Joint Ministerial Statement of the Tenth ASEAN+3 Finance Ministers’ Meeting)

Press Release

 


ASEAN+3 Macroeconomic Research Office (AMRO)

Asian Bond Markets Initiative (ABMI)

Objective

The Asian Bond Markets Initiative aims to develop efficient and liquid bond markets in Asia, enabling better utilization of Asian savings for Asian investments. Activities of the ABMI focus on the following two areas: (1) facilitating access to the market through a wider variety of issuers and types of bonds, and (2) enhancing market infrastructure to foster bond markets in Asia.

Background

Because of the underdevelopment of capital markets, Asian countries have depended on short-term foreign currency-denominated financing. This causes “maturity” and “currency” mismatches, making the region vulnerable to volatility in short-term capital movements. These risks were brought to the surface by the Asian financial crisis in 1997-98. Developing bond markets in the region is a very effective way to solve such problems and to significantly reduce “currency” and “maturity” mismatches in regional financing. At the 6th ASEAN+3 Finance Ministers’ Meeting in August 2003 (Manila, the Philippines), finafnce ministers agreed to promote the Asian Bond Markets Initiative.
(Joint Ministerial Statement of the Sixth ASEAN+3 Finance Ministers’ Meeting)
(Chairman’s Press Release on the Asian Bond Markets Initiative)

Recent Progress

Issuance of Korean Collateralized Bond Obligations (CBO) (“Pan-Asia Bond”) with guarantee by the Japan Bank for International Cooperation (JBIC) and the Industrial Bank of Korea (IBK).
(Press release: Joint Efforts by the Ministry of Finance of Japan and the Ministry of Finance & Economy of the Republic of Korea to Promote Collateralized Debt Obligations Markets in Asia)
Issuance of local currency-denominated bonds by Japanese subsidiaries in Thailand, Malaysia and Indonesia with a partial credit guarantee from the JBIC and Nippon Export and Investment Insurance (NEXI).
Issuance of local currency-denominated bonds by the Japan Bank for International Cooperation (JBIC), World Bank, Asian Development Bank (ADB) and the International Finance Corporation (IFC) in Malaysia, Thailand, China, and the Philippines.
Information dissemination through the Asian Bonds Online (ABO) at the ADB.
(Progress in the ABMI is outlined in the ABMI progress reports which are submitted by the ABMI Working Groups. Those progress reports are available at the Asian Bonds Online (ABO) .)
At the 10thfff ASEAN+3 Finance Ministers’ Meeting in May 2007 (Kyoto, Japan), finance ministers endorsed undertaking of the following new studies: Exploring New Debt Instruments for Infrastructure Financing, Promotion of Securitisation of Loan Credits and Receivables, and Promotion of Asian Medium Term Note (MTN) Programme.
(Joint Ministerial Statement of the Tenth ASEAN+3 Finance Ministers’ Meeting)

 


Asian financial crisis

Economic Review and Policy Dialogue (ERPD)

Objective

Effective economic review and policy dialogue would contribute to the prevention of financial crises through the early detection of irregularities and the swift implementation of remedial policy actions. It will also lay a foundation for providing immediate assistance, such as the CMI, in the event of a crisis.
ASEAN+3 countries have been conducting Economic Review and Policy Dialogue (ERPD) at the Ministers’ level annually and at the Deputies’ level twice a year to discuss economic and financial developments in the region.

Recent Progress

At the 9th ASEAN+3 Finance Ministers’ Meeting in May 2006 (Hyderabad, India), finance ministers agreed to launch the Group of Experts (GOE) and the Technical Working Group on Economic and Financial Monitoring (ETWG) to explore the ways for further strengthening surveillance capacity in East Asia. While welcoming the initial progress made by the GOE and the ETWG, finance ministers at the 10th Meeting in May 2007 (Kyoto, Japan) further agreed to explore ways on how to link these activities with strengthened surveillance within the region.
(Joint Ministerial Statement of the Tenth ASEAN+3 Finance Ministers’ Meeting)

 


ASEAN+3 Research Group

Objective

The ASEAN+3 Research Group was launched at the ASEAN+3 Finance Ministers’ Meeting held in August 2003. The Research Group aims at identifying and exploring the subjects for possible regional financial cooperation from mid- and long-term point of views, seeking academic insights from researchers in the region. Summaries and reports of the Research Group are available at the official website of the ASEAN Secretariat.)

Research Topics

  • In 2011/12:
    1. Dealing with Commodity Price Volatility in East Asia
    2. Roles and Functions of the Banking Sector in the financial system of the ASEAN+3 region
    3. The Role of Regional Financial Safety Nets in the Global Architecture
  • In 2012/13:
    1. The International Discussions on the Credit Rating Agencies and Enhancing Infrastructure to Strengthen the regional Credit rating Capacity in the ASEAN+3 Region