 Strategy and Finance Minister Yoon Jeung-hyun, right, poses with Japan’s finance minister Naoto Kan, center, and China’s finance minister Xie Xuren, after they meet in preparation for the ASEAN plus Three meeting in Tashkent, Uzbekistan, Sunday. / Courtesy of the Ministry of Strategy and Finance |
By Kim Jae-kyoung, Cho Jin-seo
Staff Reporters
Finance ministers of South Korea, Japan and China agreed Sunday that they will launch a $700 million regional credit guarantee facility in a bid to develop Asia’s bond market, the Ministry of Strategy and Finance announced in a press release.
The agreement came at a finance ministers’ meeting of the three countries held in Uzbekistan on the sidelines of the 43rd annual meeting of the Asian Development Bank (ADB).
Under the agreement, South Korea will contribute $100 million, while Japan and China will provide $200 million each to the Credit Guarantee and Investment Facility (CGIF), said the finance ministry after the three nations held a meeting in Uzbekistan.
The remainder will be shouldered by the Asian Development Bank and members of the Association of Southeast Asian Nations (ASEAN), it said.
The countries also paved the road toward a stronger economic bond by agreeing on the composition of a regional economic monitoring unit.
For the operation of the ASEAN Plus Three Macroeconomic Research Office (AMRO), Korea will pay 16 percent of the budget, while Japan and China will each be responsible for double that amount. Combined the three nations account for 80 percent of the total cost. The smaller 10 Southeast Asian nations will together pay the remaining 20 percent.
The plan was agreed on Sunday at the meeting of the three nations’ finance ministers in Tashkent, Uzbekistan, ahead of the main ``ASEAN plus Three’’ meeting held on the same day. The 16-32-32-20 proportion is equal to the nations’ contribution to the Chiang Mai Initiative (CMI), an emergency fund for the Asian economies which is already in effect.
``The three nations agreed that a fast consensus is needed on the AMRO’s organization structure and budget contribution for the multilateral CMI to take root successfully,’’ the South Korean Ministry of Strategy and Finance said Sunday.
The three nations brought the issue to the main meeting with ASEAN (Association of Southeast Asian Nations) members late Sunday. The results of the meeting have not yet been released, but they are sure to approve it, the ministry said.
As the three largest economies, Korea, China and Japan have taken the leading role in the regional discussion of establishing an Asian version of the International Monetary Fund (IMF), so they can help each other more efficiently should an economic disaster hit any of the members again. It was the 1997 financial crisis of Asia and the controversial mishandling of the crisis by the IMF that fostered distrust toward the organization, which is run mostly by rich Western countries.
Under the CMI, the 13 nations are bound by a multilateral currency swap arrangement worth $120 billion.
Officials from the member countries, as well as economists in the region, have hoped that this collaboration will develop into a more comprehensive economic supervisory body for Asia. In Tashkent, they promised to form a taskforce on the future priorities of the financial cooperation, the finance ministry’s release said.
To be situated in Singapore, AMRO is expected to be the headquarters of the Asian monetary body. The member nations are now searching for candidates for its director, who is required to have both academic and networking capabilities.
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