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ASEAN+3 Finance Ministers to Move Cooperation at Higher Level
Source: aseansec.org
Source Date: Friday, May 07, 2010
Focus: Institution and HR Management
Created: May 10, 2010

With the increasing challenges posed by the post-crisis economy and the need to further strengthen regional financial stability in East Asia, Finance Ministers of ASEAN, China, Japan and the Republic of Korea have vowed to step-up their cooperation efforts. “We agreed to bring the financial cooperation to a higher and more strategic level,” the ministers said in a joint statement at the conclusion of their meeting on 2 May 2010 in Tashkent, Uzbekistan at the sidelines of the 43rd ADB Annual Meeting.

Since financial cooperation started in 1999, ASEAN+3 countries have managed to implement a number of major initiatives. Last month, the first multilateral currency swap facility – the USD 120 million Chiang Mai Initiative Multilateralisation (CMIM) – came into effect. The ASEAN+3 Macroeconomic Research Office (AMRO) to support the CMIM will be set up early next year. Another USD 700 million Credit Guarantee and Investment Facility (CGIF) under the Asian Bond Markets Initiative (ABMI) was launched by the ministers on 2 May 2010 and is expected to be operational before the end of the year.

A task force will also be created to take stock of ASEAN+3 finance cooperation and achievements, and to recommend new areas that the region should focus to move cooperation forward in the changing global and regional situation.

“Obviously these achievements serve as important building blocks in re-shaping the region’s financial architecture, and it is definitely a clear testimony of how far ASEAN+3 finance cooperation has progressed,” said S. Pushpanathan, Deputy Secretary-General of ASEAN for ASEAN Economic Community. He further added that, “while all these finance initiatives are good to boost confidence in the region, what is needed is a new perspective for a more dynamic East Asia in the post-crisis recovery era.”

Established in 2003, ABMI is designed to utilise the region’s huge savings to develop local-currency denominated bond markets in ASEAN+3 countries. The CGIF thus becomes the most concrete result of that initiative to provide guarantee to bonds issued by Asian companies, therefore facilitating corporate bond issuance and reducing funding costs.

AMRO is also expected to play an important role in securing the region’s stability through the conduct of comprehensive surveillance of regional economies to support decision-making process for CMIM. Details of this new office, to be established in Singapore, are currently being discussed.

Regional surveillance has become an important area for cooperation in ASEAN+3 countries since the Asian crisis in 1997. Although these countries have managed to rebound quickly from the global financial crisis last year, their economies remain vulnerable. According to the ministers, “East Asian economies now face the challenge of promoting sound economic structural reforms in preparation for the next phase of growth.” It is expected that ASEAN+3 countries will grow by 4.6% this year from 0.9% in 2009.

In addition to regional financing and bond market development, other key initiatives in ASEAN+3 include the economic review and policy dialogue, research group to undertake studies on key issues in the financial sector, and technical assistance and capacity building programs to strengthen regional financial markets.
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