USD 120 BLN CHIANG MAI INITIATIVE MULTILATERISATION SWAP FACILITY COMES INTO EFFECT

Jakarta, March 25 (ANTARA) - The Chiang Mai Initiative Multilaterisation (CMIM), a USD 120 billion currency swap facility , came into effect Wednesday, according to information on the official website of the ASEAN Secretariat, Thursday.

"The entry into force of the CMIM is a momentous event because the multilateral swap facility is the first regional financing arrangement created for ASEAN+3," said Jakarta-based Secretary-General of ASEAN, Dr Surin Pitsuwan.

The CMIM involving the central banks and finance ministries of ASEAN, China, Japan and the Republic of Korea (ASEAN+3) and the Monetary Authority of Hong Kong, China.

"It also demonstrates the region?s coordinated response to the global financial crisis, and our strong commitment to regional financial stability," he added.

As a regional liquidity mechanism, the CMIM aims to provide financial support to countries with short-term liquidity needs, and to supplement existing international financing arrangements. Each CMIM participant is entitled to swap its local currency with US dollars up to a multiple of its contribution.

The CMIM evolved from a network of bilateral currency swaps that first began in 2002. The decision to transform them into a multilateral currency swap contract was made in 2006 when the ASEAN+3 Finance Ministers recognised the need to facilitate prompt and simultaneous currency swap transactions by establishing a common decision making mechanism under a single contract.

"Definitely the CMIM is a good start, especially at this critical juncture of our recovery from the global economic and financial crisis," Dr Surin said. He further added that although the global economy is recovering from the crisis, the downside risks remain substantial.

"This is the reason why the launching of CMIM today is significant. The CMIM signifies the region's commitment to remain resilient against external shocks."
Under the CMIM, China, Japan and the Republic of Korea contributed USD 96 billion, while ASEAN countries as a group contributed USD 24 billion.
Within ASEAN, Indonesia, Malaysia, Singapore and Thailand contributed USD 4.77 billion each, while the Philippines contributed USD 3.68 billion.

Brunei Darussalam USD contributed 30 million, Cambodia USD 120 million, Lao PDR USD 30 million, Myanmar USD 60 million, and Viet Nam USD 1 billion.