Regional financial safety net in east Asia further strengthened with amended Chiang Mai agreement

The Association of Southeast Asian Nations (ASEAN), China, Japan and South Korea (ASEAN+3) further strengthened the regional financial safety net with the amended Chiang Mai Initiative Multilateralisation (CMIM) Agreement.

The amended agreement came into effect Wednesday. In addition to the U.S. dollar, it allows the use of members' local currencies for CMIM financing within the CMIM's total financing capacity of 240 billion U.S. dollars, according to a statement released Wednesday by the Bank of Thailand, the country's central bank.

The CMIM agreement is a regional financing arrangement among finance ministers and central bank governors of the ASEAN+3 as well as the Hong Kong Monetary Authority. It helps support regional financial stability by allowing member economies to tap currency swap lines to secure currencies in need.

The amendment will further enhance the effectiveness and operational readiness of the CMIM to better serve as the center of the regional safety net for Thailand and other ASEAN+3 members, the Thai central bank said.

The amended agreement also increased the International Monetary Fund (IMF) De-linked Portion from 30 percent to 40 percent of each member's maximum arrangement amount, according to the statement.

The IMF De-linked Portion is the amount each member may request from the CMIM when there is no matching IMF supported program. The amendment of increased IMF De-linked Portion made the CMIM more readily available to the countries in need.