Asian fund so near yet so far

Asia has not forgotten the "Asian Monetary Fund" (AMF). In fact, the case for the AMF has been much strengthened by the difficulty in reforming the governance of the International Monetary Fund (IMF).

On May 4, the Association of Southeast Asian Nations (ASEAN) and its three Northeast Asian partners China, Japan and South Korea met in Hanoi, Vietnam, and took an important step toward establishing the AMF. The ASEAN+3 finance ministers met with Wei Benhua, newly appointed director of the ASEAN+3 Macroeconomic Research Office (AMRO), which will be based in Singapore. They instructed their deputies to review AMRO's organizational capacity and hoped that it would be operational soon. The setting up of AMRO is a critical step toward the establishment of AMF.

The other critical step in establishing the AMF was the Chiang Mai initiative (CMI) and its successor, the Chiang Mai initiative multilateralization (CMIM), which came into effect in March 2010. After the Asian financial crisis of 1997-1998, ASEAN+3 countries launched the CMI, comprising a network of bilateral swaps among each other, as part of their regional self-help mechanism. These swaps were "multilateralized" - that is, they could be withdrawn simultaneously with one agreement. This formed the CMIM, comprising the $120-billion crisis fund.