Asian states to double currency defence fund

Cambodia's Peace Palace: There was a consensus in the group to double the fund and the decision would be formally endorsed at a meeting of finance ministers on Friday, part of a series of ASEAN discussions being hosted by Cambodia leading up to a leaders summit next week. - AP photo

PHNOM PENH (Reuters): Asian policymakers have agreed to double the size of a regional fund that aims to defend their economies against currency volatility to $240 billion, Cambodian officials said on Thursday.

“We want to build a stronger, more solid firewall against contagion,” Vong Seyvisoth, secretary of state at Cambodia’s ministry finance said, following meetings in Phnom Penh among officials of the Association of South East Asian Nations (ASEAN) plus China, Japan and South Korea.

He said there was a consensus in the group to double the fund and that the decision would be formally endorsed at a meeting of finance ministers on Friday, part of a series of ASEAN discussions being hosted by Cambodia leading up to a leaders summit next week.

A Cambodian central bank official earlier confirmed to Reuters that the Chiang Mai Initiative fund, originally set up after the 1997 Asian financial crisis, would be doubled.

“It will be raised to $240 billion”, said the official, who asked not to be identified.

Seyvisoth said the region was in a strong position to strengthen its communal defences against crisis thanks to its high levels of foreign exchange reserves.

The Chiang Mai Initiative Multilateralisation (CMIM) is the official name of the pool of currency swaps and fund contributions of the 13 Asian nations. The countries launched the CMIM fund in March 2010 as an expanded and multilateralised form of the previous web of mostly bilateral currency swaps.

ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.