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News Briefing

ASEAN+3 Agrees on Strengthening Chiang Mai Initiative Multilateralization (CMIM)

The 27th ASEAN+3 Meeting of Finance Ministers and Central Bank Governors was held on May 3, co？chaired by Korea and Laos. In the first session, the participants including international organizations exchanged views on recent globaland regional economic trends and risk factors. The member countries also discussed their own economictrends and policy responses. The member countries forecasted that the ASEAN+3 economy is expected to grow thanks to robustdomestic demand and export recovery driven by the rebounding global semiconductor industry, as inflationcontinues to ease. However, the countries expressed concerns about potential risks such as a spike in globalcommodity prices, escalation of geopolitical tensions, and increased volatility in the foreign exchangemarket. Recognizing that the current positive outlook provides an opportunity to strengthen countries fiscalspace, the members agreed on the importance of securing fiscal sustainability, maintaining tight monetarypolicies, and unlocking growth potential. In addition, the member countries reaffirmed their commitment topromoting an open, free, and fair rules-based multilateral trading system. Deputy Prime Minister Choi Sang-mok appreciated the efforts of each member country to normalizeeconomic policies post-pandemic as well as to promote a rapid economic recovery momentum. However,given the economic regions relatively high degree of external dependence, Deputy Prime Minister Choiemphasized the need to remain vigilant against risk factors such as rising geopolitical tensions and volatilefinancial markets, particularly the foreign exchange market. The Deputy Prime Minister further highlightedthat collective monitoring on these risk factors and sharing knowledge and experiences related to policiesamong member countries could enhance the regions resilience to crises and prevent risks in advance. In the second session, where the financial cooperation in the region was discussed, the measures to strengthenthe Chiang Mai Initiative Multilateralization (CMIM), a regional financial safety net, was on the agenda. The member countries shared the importance of reinforcing regional financial safety nets, given the ongoinguncertainties in the global and regional economies. The countries approved the introduction of a newlending program, Rapid Financing Facility (RFF), which aims to provide financial support in the event ofsudden external shocks such as pandemics or natural disasters. In addition, the member countries agreedto incorporate eligible freely usable currencies (FUC) as RFFs currency of choice. The governments havecommitted to launching the REF in the ministers meeting next year after completing the amendments tothe CMIM agreement by the end of this year. Furthermore, the member countries agreed on the benefits of transitioning the financing mechanism into apaid-in capital structure. In this regard, they have decided to analyze the advantages and disadvantages ofvarious financing structures and subsequently choose a structure by 2025. Deputy Prime Minister Choi recognized that the CMIM marks the beginning of cooperation among ASEAN+3countries in response to regional financial crises. It is also regions the most significant outcome of thiscollaboration, noting that this meeting of ministers delivered the crucial decisions in terms of shoring up theCMIM. Deputy Prime Minister Choi hoped that the subsequent procedures would be swiftly concluded,expecting the CMIM to serve as a useful tool for responding to crises and promoting rapid economic recovery. Finally, the participating member countries called on the ASEAN+3 Macroeconomic Research Office(AMRO) to not only assess macroeconomic situations in the region but also to analyze emerging risks andchallenges in a timely fashion. The member countries also expressed support for the development of aregional bond market and endeavors to explore new agendas on financial cooperation.

Jun 2024