China, Japan , South Korea to form $120-billion emergency fund

04 May 2009

The Association of Southeast Asian Nations and Asia's leading economies - China, Japan and South Korea mutually agreed on Sunday to form a $120 billion emergency fund, a regional initiative,administered internally to counter any global financial crisis.

Finance ministers from 13 east and Southeast Asian countries reached an agreement on the sidelines of the 42nd annual meeting of the Asian Development Bank (ADB) in Bali, to improve the existing Chiang Mai Initiative Multilateralisation or CMIM network of bilateral currency swap schemes to a multilateral operation by the end of this year.

China and Japan will each contribute 32 per cent ($38.4 billion), while South Korea will provide 16 per cent ($19.2 billion) which amounts to 80 per cent of the total $120 billion emergency fund. The remaining 20 per cent will be provided by the 10-member Association of South East Asian Nations.

The four larger ASEAN economies - Indonesia, Malaysia, Singapore and Thailand - will contribute $4.77 billion each and Philippines will contribute $3.68 billion. The allocations will not exceed 10 per cent of each country's foreign reserves.

The smaller five economies namely Brunei, Cambodia, Laos, Myanmar and Vietnam will contribute 5 per cent of their foreign reserves.

The combined bilateral deals arrived at, was to the tune of $83 billion.