Asean+3 to pool foreign exchange reserves

05 May 2007

Mumbai: Asian countries will pool part of their massive foreign exchange reserves to ward off a repeat of the financial crisis that devastated the region a decade ago.

This was decided at a meeting of finance ministers of Asian countries held in Kyoto, Japan.

The pooling reserves, which is seen as one of the ways of effectively managing foreign reserves, comes as Asian countries such as China are looking for disposing of their huge foreign currency reserves.

Ministers from member nations of the Asean along with China, Japan and South Korea (Asean+3) said they had devised steps to strengthen the region''s seven-year-old web of currency swaps, called the Chiang Mai Initiative (CMI).

"Proceeding with a step-by-step approach, we unanimously agreed in principle that a self-managed reserve pooling arrangement governed by a single contractual agreement is an appropriate form of multilateralisation," they said in a statement.

The ministers, who met on the sidelines of the Asian Development Bank''s annual meeting in Kyoto, western Japan, said the group would carry out further studies on how much foreign reserves would be pooled and who would manage them.