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Tuesday December 29, 2009

Chiang Mai Initiative multilateral accord signed

PETALING JAYA: The member states of Asean, together with China, Japan and South Korea (Asean + 3), signed the Chiang Mai Initiative multilateral agreement yesterday as part of steps to strengthen the region’s capacity to address balance of payments and short-term liquidity difficulties.

Known as the Chiang Mai Initiative Multilateralisation, the agreement also supplements existing international financial arrangements.

According to a statement released by Bank Negara, the signing of the agreement by the finance ministers and central bank governors of Asean + 3 and the Monetary Authority of Hong Kong, followed the conclusion of talks on the main components of the agreement in Bali, Indonesia in May.

The Chiang Mai Initiative Multilateralisation, with a total multilateral facility size of US$120bil, would provide financial support to participants through a network of currency swap transactions in order to address balance of payments and short-term liquidity difficulties.

Bank Negara said that the participants could swap their respective currencies with US dollars for an amount up to the participants’ contribution multiplied by the respective purchasing multiplier as provided for under the agreement.

Malaysia, which will be contributing 3.97% or US$4.77bil of the total amount under the Chiang Mai Initiative Multilateralisation, will be able to draw on a facility of up to US$11.92bil based on its purchasing multiple of 2.5 times.

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