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Asia's regional currency swap plan comes into effect

(Xinhua)
Updated: 2010-03-24 17:36

BEIJING: A currency swap agreement between China, Japan, the Republic of Korea (ROK) and the 10-member Association of Southeast Asian Nations (ASEAN) came into effect Wednesday.

The currency swap agreement, or the Chiang Mai Initiative Multilateralization (CMIM) agreement, totaled $120 billion, said a statement posted Wednesday on the website of the People's Bank of China, China's central bank.

The agreement was signed in December last year by the finance ministers and central bank governors of the ASEAN, China, Japan and the ROK, as well as the Hong Kong Monetary Authority chief.

The CMIM agreement aimed to provide financial support to the CMIM participant countries who face short-term liquidity shortages, according to the statement.

Under the CMIM agreement, China, Japan, the Republic of Korea, and the 10-member ASEAN countries will be able to swap their currencies with US dollars for an amount proportionate to their contribution to the regional reserve pool in case of a liquidity shortage, the statement said.

China and Japan contributed $38.4 billion each to the liquidity pool and the ROK offered $19.2 billion. The 10 ASEAN nations provided a combined $24 billion, according to the statement.

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