Chiang Mai Initiative - AbsoluteAstronomy.com

The Chiang Mai Initiative (CMI) is a multilateral currency swap

Currency swap

A currency swap is a foreign-exchange agreement between two parties to exchange aspects of a loan in one currency for equivalent aspects of an equal in net present value loan in another currency; see foreign exchange derivative. Currency swaps are motivated by comparative advantage...

arrangement among the ten members of the Association of Southeast Asian Nations (ASEAN), the People's Republic of China

People's Republic of China

China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...

(including Hong Kong

Hong Kong

Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...

), Japan

Japan

Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

, and South Korea

South Korea

The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...

. It draws from a foreign exchange reserves

Foreign exchange reserves

Foreign-exchange reserves in a strict sense are 'only' the foreign currency deposits and bonds held by central banks and monetary authorities. However, the term in popular usage commonly includes foreign exchange and gold, Special Drawing Rights and International Monetary Fund reserve positions...

pool worth US$

United States dollar

The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....

120 billion and was launched on 24 March 2010.

The initiative began as a series of bilateral swap arrangements after the ASEAN Plus Three countries met on 6 May 2000 in Chiang Mai

Chiang Mai

Chiang Mai sometimes written as "Chiengmai" or "Chiangmai", is the largest and most culturally significant city in northern Thailand. It is the capital of Chiang Mai Province , a former capital of the Kingdom of Lanna and was the tributary Kingdom of Chiang Mai from 1774 until 1939. It is...

, Thailand

Thailand

Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...

, at an annual meeting of the Asian Development Bank

Asian Development Bank

The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...

. After 1997 Asian Financial Crisis, member countries started this initiative to manage regional short-term liquidity problems and to facilitate the work of other international financial arrangements and organizations like International Monetary Fund

International Monetary Fund

The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...

Conception

Finance ministers of members of the Association of Southeast Asian Nations (ASEAN), the People's Republic of China

People's Republic of China

, Japan

Japan

, and South Korea

South Korea

met on 6 May 2000 at the 33rd Annual Meeting of the Board of Governors of the Asian Development Bank

Asian Development Bank

The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...

(ADB) in Chiang Mai

Chiang Mai

, Thailand

Thailand

, to discuss the establishment of a network of bilateral currency swap

Currency swap

agreements. The proposal was dubbed the Chiang Mai Initiative and intended to avoid a future recurrence of the 1997 Asian Financial Crisis. It also implied the possibility of establishing a pool of foreign exchange reserves

Foreign exchange reserves

accessible by participating central banks to fight currency speculation

Speculation

In finance, speculation is a financial action that does not promise safety of the initial investment along with the return on the principal sum...

. The proposal would also supplement international institutions such as the International Monetary Fund

International Monetary Fund

(IMF), which initiated a program to stabilize the collapsing financial system in 1997.

Early critics questioned the reasoning behind the initiative. The Asia Times Online
Asia Times Online
Asia Times Online is a bilingual English‒Chinese, Internet-based newspaper covering geopolitics, politics, economics and business "from an Asian perspective"...

wrote in an editorial published several days after the meeting, "The idea that the existence of a currency swap arrangement or the wider concept of an Asian monetary fund [...] could have prevented the Asian crisis or the worst of it, is both wrong and politically noxious." After IMF Managing Director Horst Köhler

Horst Köhler

Horst Köhler is a German politician of the Christian Democratic Union. He was President of Germany from 2004 to 2010. As the candidate of the two Christian Democratic sister parties, the CDU and the CSU, and the liberal FDP, Köhler was elected to his first five-year term by the Federal Assembly on...

visited five Asian nations, including Thailand, in June 2000, the Asia Times Online denounced his endorsement of "the ill-conceived and likely never to be implemented Asean plus three [...] currency-swap plan". In a 2001 interview with the Far Eastern Economic Review
Far Eastern Economic Review
The Far Eastern Economic Review was an English language Asian news magazine started in 1946. It printed its final issue in December 2009. The Hong Kong-based business magazine was originally published weekly...

, Köhler stated that the CMI would promote regional economic cooperation and development and that he would not oppose the formation of an Asian Monetary Union.

Expansion

As of 16 October 2009, the network consisted of 16 bilateral arrangements among the ASEAN Plus Three countries worth approximately US$

United States dollar

The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....

90 billion. Additionally, the ASEAN Swap Arrangement had a reserves pool of approximately US$2 billion.

Multilateralization

In May 2007, at the 10th meeting of ASEAN+3 Finance Ministers the CMI further progress was agreed upon.

In February 2009, ASEAN+3 agreed to expand the fund to $120 billion up from the original level of $78 billion proposed in 2008.

During the April 2009 meeting of ASEAN finance ministers in Pattaya

Pattaya

Pattaya is a city in Thailand, located on the east coast of the Gulf of Thailand, about 165 km southeast of Bangkok located within but not part of Amphoe Bang Lamung in the province of Chonburi....

, Thailand, the individual contributions to be made by each member state toward the reserves pool were announced. Each of the six original ASEAN members—Indonesia, Malaysia, Singapore, the Philippines, and Thailand—agreed to contribute US$4.77 billion, while each of the remaining four members would contribute between US$30 million and US$1 billion. The ten countries were scheduled to meet their partners following the finance ministers' meeting, but the summit's cancellation due to the Thai political crisis delayed the launch of the multilateral agreement to a later date. When leaders of the thirteen countries finally met in Bali

Bali

Bali is an Indonesian island located in the westernmost end of the Lesser Sunda Islands, lying between Java to the west and Lombok to the east...

in May, they finalized the individual contributions of China, Japan, and South Korea. This summit also added Hong Kong

Hong Kong

as a new participant, whose contribution was added to that of China though Hong Kong remained "a monetary administration on its own". Its participation raised China's total contribution to US$38.4 billion, equal to that of Japan, and South Korea, which agreed to contribute US$19.2 billion.

The Chiang Mai Initiative Multilateralisation (CMIM) Agreement was signed on 28 December 2009, and took effect on 24 March 2010.

Participants

Bloomberg

Bloomberg L.P.

Bloomberg L.P. is an American privately held financial software, media, and data company. Bloomberg makes up one third of the $16 billion global financial data market with estimated revenue of $6.9 billion. Bloomberg L.P...

estimated that participants of the Chiang Mai Initiative held more than US$4.1 trillion of foreign exchange reserves in 2009.

Country	Currency	Central bank	2010 Nominal GDP Gross domestic product Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living.... (millions of US$ United States dollar The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies.... )	2010 PPP GDP Gross domestic product Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living.... (millions of US$ United States dollar The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies.... )	Financial contribution (millions of US$ United States dollar The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies.... )
People's Republic of China People's Republic of China China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres... and Hong Kong Hong Kong Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...	renminbi Renminbi The Renminbi is the official currency of the People's Republic of China . Renminbi is legal tender in mainland China, but not in Hong Kong or Macau. It is issued by the People's Bank of China, the monetary authority of the PRC... and dollar Hong Kong dollar The Hong Kong dollar is the currency of the jurisdiction. It is the eighth most traded currency in the world. In English, it is normally abbreviated with the dollar sign $, or alternatively HK$ to distinguish it from other dollar-denominated currencies...	People's Bank of China People's Bank of China The People's Bank of China is the central bank of the People's Republic of China with the power to control monetary policy and regulate financial institutions in mainland China... and Hong Kong Monetary Authority Hong Kong Monetary Authority The Hong Kong Monetary Authority or HKMA is Hong Kong's central banking institution . It is a government authority founded on 1 April 1993 via the consolidation of "Office of the Exchange Fund" and the "Office of the Commissioner of Banking"...	5,971,618The individual nominal GDP of the People's Republic of China and of Hong Kong are US$5,745,133,000,000 and US$226,485,000,000, respectively.	10,406,855The individual PPP GDP of the People's Republic of China and of Hong Kong are US$10,084,369,000,000 and US$322,486,000,000, respectively.	38,400Hong Kong's US$4,200,000,000 contribution is included in that of the People's Republic of China.
Japan Japan Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...	yen Japanese yen The is the official currency of Japan. It is the third most traded currency in the foreign exchange market after the United States dollar and the euro. It is also widely used as a reserve currency after the U.S. dollar, the euro and the pound sterling...	Bank of Japan Bank of Japan is the central bank of Japan. The Bank is often called for short. It has its headquarters in Chuo, Tokyo.-History:Like most modern Japanese institutions, the Bank of Japan was founded after the Meiji Restoration...	5,390,897	4,308,627	38,400
South Korea South Korea The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...	won South Korean won The won is the currency of South Korea. A single won is divided into 100 jeon, the monetary subunit. The jeon is no longer used for everyday transactions, and appears only in foreign exchange rates...	Bank of Korea Bank of Korea The Bank of Korea is the central bank of South Korea and issuer of South Korean won. It was established on June 12, 1950 at Seoul, South Korea.The Bank's primary purpose is price stability. For that, the Bank targets inflation...	1,007,084	1,457,063	19,200
Indonesia Indonesia Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...	rupiah Indonesian rupiah The rupiah is the official currency of Indonesia. Issued and controlled by the Bank of Indonesia, the ISO 4217 currency code for the Indonesian rupiah is IDR. Informally, Indonesians also use the word "perak" in referring to rupiah...	Bank Indonesia Bank Indonesia Bank Indonesia is the central bank of The Republic of Indonesia. Bank Indonesia is currently governed by Darmin Nasution, former interim governor. The last governor before the interim phase, Boediono, resigned due to his vice presidential candidacy in the Indonesian presidential election...	695,059	1,027,437	4,770
Thailand Thailand Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...	baht Thai baht The baht is the currency of Thailand. It is subdivided into 100 satang . The issuance of currency is the responsibility of the Bank of Thailand.-History:The baht, like the pound, originated from a traditional unit of mass...	Bank of Thailand Bank of Thailand - History :The Bank of Thailand was first set up as the Thai National Banking Bureau. The Bank of Thailand Act was promulgated on 28 April 1942 vesting upon the Bank of Thailand the responsibility for all central banking functions...	312,605	584,768	4,770
Malaysia	ringgit Malaysian ringgit The Malaysian ringgit is the currency of Malaysia. It is divided into 100 sen...	Bank Negara Malaysia Bank Negara Malaysia Bank Negara Malaysia is the Malaysian central bank. Established on January 26, 1959 as the Bank Negara Malaya, its main purpose was to issue currency, act as banker and adviser to the Government of Malaysia and regulate the country's credit situation...	218,950	412,302	4,770
Singapore Singapore Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...	dollar Singapore dollar The Singapore dollar or Dollar is the official currency of Singapore. It is normally abbreviated with the dollar sign $, or alternatively S$ to distinguish it from other dollar-denominated currencies...	Monetary Authority of Singapore Monetary Authority of Singapore The Monetary Authority of Singapore is Singapore's central bank and financial regulatory authority...	217,377	291,712	4,770
Philippines Philippines The Philippines , officially known as the Republic of the Philippines , is a country in Southeast Asia in the western Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam...	peso Philippine peso The peso is the currency of the Philippines. It is subdivided into 100 centavos . Before 1967, the language used on the banknotes and coins was English and so "peso" was the name used...	Central Bank of the Philippines	189,061	350,279	3,680
Vietnam Vietnam Vietnam – sometimes spelled Viet Nam , officially the Socialist Republic of Vietnam – is the easternmost country on the Indochina Peninsula in Southeast Asia. It is bordered by China to the north, Laos to the northwest, Cambodia to the southwest, and the South China Sea –...	đồng	State Bank of Vietnam State Bank of Vietnam The State Bank of Vietnam is the central bank of Vietnam.-History:When French Indochina was under French rule, the colonial government governed the Indochinese monetary system through Indochinese Bank, which also acted as a commercial bank in French Indochina...	101,987	275,639	1,000
Cambodia Cambodia Cambodia , officially known as the Kingdom of Cambodia, is a country located in the southern portion of the Indochina Peninsula in Southeast Asia...	riel Cambodian riel For earlier Cambodian currencies, see Cambodian tical and Cambodian franc.The riel is the currency of Cambodia. There have been two distinct riel, the first issued between 1953 and May 1975. Between 1975 and 1980, the country had no monetary system. A second currency, also named "riel", has been...	National Bank of Cambodia National Bank of Cambodia The National Bank of Cambodia, located in Phnom Penh, is the central bank of Cambodia. The bank's duties include, inter alia, the management of monetary and exchange policies, the regulation of banks and financial institutions, and the control of the national currency, the riel...	11,360	29,811	120
Myanmar (Burma)	kyat Myanma kyat The kyat is the currency of Burma . It is often abbreviated as "K", which is placed before the numerical value.-First kyat, 1852-1889:...	Central Bank of Myanmar Central Bank of Myanmar The Central Bank of Myanmar is the central bank of Myanmar . It was established under the Central Bank of Myanmar Law in 1990. Its headquarters are in Yankin Township, Yangon, Yangon Division and is headed by a 17-member board of directors, headed by Than Nyein...	35,646	76,240	60
Brunei Darussalam Brunei Brunei , officially the State of Brunei Darussalam or the Nation of Brunei, the Abode of Peace , is a sovereign state located on the north coast of the island of Borneo, in Southeast Asia...	dollar Brunei dollar The ringgit Brunei or the Brunei dollar , has been the currency of the Sultanate of Brunei since 1967...	Brunei Currency and Monetary Board Brunei Currency and Monetary Board The Brunei Currency and Monetary Board is the central bank of the State of Brunei. It was rechartered on February 1, 2004 pursuant to the Currency and Monetary Order of 2004.-History:...	11,963	19,925	30
Laos Laos Laos Lao: ສາທາລະນະລັດ ປະຊາທິປະໄຕ ປະຊາຊົນລາວ Sathalanalat Paxathipatai Paxaxon Lao, officially the Lao People's Democratic Republic, is a landlocked country in Southeast Asia, bordered by Burma and China to the northwest, Vietnam to the east, Cambodia to the south and Thailand to the west...	kip Lao kip The kip "Currency Lao Kip") is the currency of Laos since 1952. One kip is divided into 100 att . The official name is: ເງີນກີບລາວ, lit. Other languages say: ; code: LAK; sign: ' or ', encoded .-Free Lao Kip:...	Bank of the Lao People's Democratic Republic	6,341	15,689	30

Notes

ASEAN

**Foreign exchange reserves of ASEAN members**
Country	Foreign exchange reserves (US$ United States dollar The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies.... )	Figure as of
Brunei Darussalam Brunei Brunei , officially the State of Brunei Darussalam or the Nation of Brunei, the Abode of Peace , is a sovereign state located on the north coast of the island of Borneo, in Southeast Asia...	50,000,000,000	December 2007
Cambodia Cambodia Cambodia , officially known as the Kingdom of Cambodia, is a country located in the southern portion of the Indochina Peninsula in Southeast Asia...	2,522,000,000	August 2009
Indonesia Indonesia Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...	65,844,160,000	November 2009
Laos Laos Laos Lao: ສາທາລະນະລັດ ປະຊາທິປະໄຕ ປະຊາຊົນລາວ Sathalanalat Paxathipatai Paxaxon Lao, officially the Lao People's Democratic Republic, is a landlocked country in Southeast Asia, bordered by Burma and China to the northwest, Vietnam to the east, Cambodia to the south and Thailand to the west...	TBD	June 2009
Malaysia	96,133,200,000	November 2009
Myanmar (Burma)	3,600,000,000	November 2009
Philippines Philippines The Philippines , officially known as the Republic of the Philippines , is a country in Southeast Asia in the western Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam...	44,167,540,000	November 2009
Singapore Singapore Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...	184,337,000,000	October 2009
Thailand Thailand Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...	137,800,000,000	December 2009
Vietnam Vietnam Vietnam – sometimes spelled Viet Nam , officially the Socialist Republic of Vietnam – is the easternmost country on the Indochina Peninsula in Southeast Asia. It is bordered by China to the north, Laos to the northwest, Cambodia to the southwest, and the South China Sea –...	16,500,000,000	August 2009

Vietnam's foreign reserves shrunk from US$23 billion at the end of 2008 to approximately US$16.5 billion in August 2009.

People's Republic of China

China holds the world's largest foreign exchange reserves, which reached US$1 trillion in November 2006. The figure doubled in the second quarter of 2009 and had risen by almost 14 times within the past decade. According to a Deutsche Bank

Deutsche Bank

Deutsche Bank AG is a global financial service company with its headquarters in Frankfurt, Germany. It employs more than 100,000 people in over 70 countries, and has a large presence in Europe, the Americas, Asia Pacific and the emerging markets...

official, "China's reserves will allow the [United States] to run a higher fiscal deficit than other nations". This deficit was caused by the U.S. government's additional spending in an effort to revive the economy from a recession. The reserves reached US$2.27 trillion in September 2009, and the country's sovereign wealth fund

Sovereign wealth fund

A sovereign wealth fund is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds invest globally. Some of them have grabbed attention making bad investments in several Wall Street financial...

—the China Investment Corporation

China Investment Corporation

China Investment Corporation is a sovereign wealth fund responsible for managing part of the People's Republic of China's foreign exchange reserves. CIC was established in 2007 with approximately US$200 billion of assets under management, making it one of the largest sovereign wealth funds...

—had become more aggressive in its foreign investments.

Japan

Japan possesses the second largest foreign exchange reserves. It became the second country to reach US$1 trillion in reserves in February 2008. In contrast to China, which places "stringent" control on its currency, the Japanese government has not placed any control on the yen

Japanese yen

The is the official currency of Japan. It is the third most traded currency in the foreign exchange market after the United States dollar and the euro. It is also widely used as a reserve currency after the U.S. dollar, the euro and the pound sterling...

since 2004. The reserves reached US$1.06 trillion in October 2009.

South Korea

South Korea ranked sixth in foreign exchange reserves, which reached US$270.9 billion in November 2009. It accounted for 6.4 percent of the total ASEAN Plus Three reserves and 8 percent of the combined gross domestic product of the participating countries in 2009. The Korea Times
The Korea Times
The Korea Times is the oldest of three English-language newspapers published daily in South Korea, along with The Korea Herald and The JoongAng Daily. It is part of the same newspaper group as Hankook Ilbo, a major Korean language daily...

wrote in an editorial that the country should act as a mediator between China and Japan, whose equal contributions meant that both "should refrain from racing for regional hegemony in the cooperative grouping".

External links

Regional Financial Cooperation among ASEAN+3

The source of this article is wikipedia, the free encyclopedia. The text of this article is licensed under the GFDL.

Conception

Expansion

Multilateralization

Participants

ASEAN

People's Republic of China

Japan

South Korea

Further Reading

External links