Asian nations commit $80 billion to set up their own IMF

From Agence France-Presse
via Google News
Sunday, May 4, 2008

http://afp.google.com/article/ALeqM5hcecqtqYHXL0KY9rAPDXtHoFuWnA

MADRID, Spain -- Finance ministers of 13 Asian nations agreed here on Sunday to set up a foreign exchange pool of at least $80 billion (E52 billion) to be used in the event of another regional crisis.

China, Japan, and South Korea will contribute 80 percent of the funds, with the rest coming from the 10 members of ASEAN, they said.

The joint statement came after talks on the sidelines of the Asian Development Bank's annual meeting in Madrid.

The 13 nations agreed after the 1997-98 Asian financial crisis to set up a mainly bilateral currency swap scheme known as the Chiang Mai Initiative to protect their currencies from turmoil in the future.

At the ADB's last annual meeting in Japan in May 2007, they decided to set aside part of their foreign reserves for a multi-nation system of reserves for use in emergencies, but did not decide on the size of the pool.

"We are committed to further accelerate our work in order to reach consensus on all of the elements which include concrete conditions eligible for borrowing and contents of convenants specified in borrowing arrangements," the statement said.

Vietnam's Finance Minister Vu Van Ninh, who co-chaired the Madrid meeting, said the 13 nations would now work to develop a way of monitoring the fund.

"We think it is very important to have a rigorous surveillance system, especially in the context that regional economies have made an important and big integration into the world economy," he told reporters.

Earlier Sunday, Japanese Finance Minister Fukushiro Nukaga said the 13 Asian nations were holding talks at the ABN meeting over the creation of a multinational foreign exchange pool.

The creation of the pool is a big step toward creation of an Asian equivalent of the Washington-based International Monetary Fund (IMF).

During the 1997-1998 Asian financial crisis Indonesia, Thailand and South Korea had to borrow heavily from the IMF to boost their finances as investors sold their currencies.

The IMF forced the governments of the three nations to make unpopular spending cuts, sell state-owned firms, and raise interest rates in exchange for the loans of more than $100 billion.

The 13 countries are China, Japan, South Korea and the Association of Southeast Asian Nations (ASEAN), made up of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

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