Exchange reserve to boost Asian confidence

Asian nations recently reached an initial agreement on the establishment of a foreign-exchange reserve pool by year-end to revive investor confidence as economies around the region falter amid the worst global economic recession since World War II.

Japan, Asia's largest economy, will contribute $38.4 billion, 32 percent of the total reserve while the Chinese mainland and Hong Kong together will add a matching amount. South Korea's share will be $19.2 billion, or 16 percent. The Southeast Asian nations will contribute 20 percent of the total amount. The regional contingency fund will be used in times of turmoil, according to the May 3 agreement. A surveillance unit is to be set up to identify risks to the region and provide oversight of the $120 billion foreign reserve fund.

Undoubtedly, the establishment of the first Asian foreign reserve pool in history will produce a range of positive effects on the flagging regional economy against the backdrop of the global economic recession.