and Finance Minister
By Lee Hyo-sik
South Korea is calling on Japan, China and the 10 members of ASEAN to facilitate the establishment of a $80 billion foreign exchange fund in a joint effort to better cope with the global credit crunch. It is also proposing that the three Northeast Asian economies jointly introduce a range of fiscal stimulus steps to reinvigorate slowing business activities in the region amid the ongoing U.S. financial market turmoil and a global economic downturn.
Deputy Strategy and Finance Minister Shin Je-yoon told reporters Sunday that he will meet with his Chinese and Japanese counterparts during the upcoming IMF-World Bank annual meeting in Washington from Oct.13 to 15 and ask them to help expedite the setup of an Asian version of the International Monetary Fund (IMF) by raising $80 billion out of each country's foreign reserves.
``Vice ministers of South Korea, Japan and China will have an extensive discussion on the issue in Washington. But it will be difficult for Strategy and Finance Minister Kang Man-soo to meet his counterparts this time. The Chinese finance minister won't attend the annual meeting, while the Japanese finance minister will only participate in the G7 meeting for a day. We will try to hold a tripartite meeting as soon as possible in the near future,'' Shin said.
The move came a day after President Lee Myung-bak proposed a tripartite meeting among the finance ministers of South Korea, Japan and China aimed at coordinating polices to cope with the global financial turmoil.
``Korea, Japan and China reached a consensus on establishing the $80 billion fund with ASEAN economies in May. But details still need to be worked out. We still have to discuss how much each nation contributes to the fund and how it will be managed,'' Shin said, stressing Korea will try to make the fund operational next year.
He said the government will also promote a pan-Asia financial market surveillance system to better monitor changes on the international financial market and minimize the negative fallout on Asia.
``I will also discuss a possibility with my Japanese and Chinese counterparts to jointly introduce a stimulus package to increase domestic demand as Asia's outbound shipments will head downhill on the global economic slowdown. It will be more effective if three nations carry out policy measures in a coordinated manner,'' Shin said.
At the 41st annual meeting of the Asian Development Bank's (ADB) board of governors in Spain, finance ministers of the ASEAN+3 nations agreed to raise a minimum capital of $80 billion and create the fund to rescue crisis-hit countries by providing them with emergency money. Seoul, Beijing and Japan agreed to share 80 percent of the fund's seed capital, while 10 ASEAN members will contribute the rest.
But since then, talks have been stalled because of disagreements over how to operate the fund and how much stake should be given to respective nations.
Under the Chiang Mai Initiative adopted in 2000, the ASEAN+3 nations agreed to set up the ``Asian Monetary Fund'' to prevent a recurrence of the financial crisis in the Asian region. The system is aimed at helping crisis-hit countries use a common pool of currency reserves to overcome a financial disaster.
In line with the agreement, concerned nations signed bilateral currency swap agreements. Last year in Kyoto, Japan, they agreed to turn the bilateral system into a multilateral one.