MANILA, Philippines (AP) — Southeast Asian countries and their major trading partners China, Japan and South Korea agreed Thursday to double a regional financial crisis fund to $240 billion.
The fund, known as the Chiang Mai Initiative after the northern Thai city where it was conceived, is a collection of currency swaps set up as a safety net for Southeast Asia. Some 80 percent of the financial commitments for the fund come from China, Japan and South Korea.
Finance officials from the 10-member Association of Southeast Asian Nations and the three regional economic giants also agreed to increase the portion of the fund that countries can tap without a parallel aid package from the International Monetary Fund.
The proportion will rise to 30 percent this year from 20 percent and may be increased to 40 percent in 2014.
The finance ministers and central bank governors said in a joint statement that the agreement to boost the fund "will serve as another step forward to strengthen the regional financial safety net and to pursue sustainable growth in the region."
They said while Asia is still growing, they are fully aware of the potential risks posed by the European debt crisis, rising oil prices and increasing volatility of short-term capital flows.
Southeast Asia was the epicenter of the East Asian financial crisis in the late 1990s.
South Korean Finance Minister Bahk Jae-wan warned that with risks posed by deleveraging by Eurozone banks and possible capital flows from the ASEAN region, some member countries may tap the fund for the first time.
The fund has never been employed before, but "that does not mean we can exclude the possibility forever of (it) being used by some member countries," he said.