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News Briefing
ASEAN+3 Agrees on Strengthening Chiang Mai Initiative Multilateralization (CMIM)
Jun 2024
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 global and regional economic trends and risk factors. The member countries also discussed their own economic trends and policy responses.

The member countries forecasted that the ASEAN+3 economy is expected to grow thanks to robust domestic demand and export recovery driven by the rebounding global semiconductor industry, as inflation continues to ease. However, the countries expressed concerns about potential risks such as a spike in global commodity prices, escalation of geopolitical tensions, and increased volatility in the foreign exchange market. Recognizing that the current positive outlook provides an opportunity to strengthen countries’ fiscal space, the members agreed on the importance of securing fiscal sustainability, maintaining tight monetary policies, and unlocking growth potential. In addition, the member countries reaffirmed their commitment to promoting an open, free, and fair rules-based multilateral trading system.

Deputy Prime Minister Choi Sang-mok appreciated the efforts of each member country to normalize economic policies post-pandemic as well as to promote a rapid economic recovery momentum. However, given the economic region’s relatively high degree of external dependence, Deputy Prime Minister Choi emphasized the need to remain vigilant against risk factors such as rising geopolitical tensions and volatile financial markets, particularly the foreign exchange market. The Deputy Prime Minister further highlighted that collective monitoring on these risk factors and sharing knowledge and experiences related to policies among member countries could enhance the region’s resilience to crises and prevent risks in advance. 

In the second session, where the financial cooperation in the region was discussed, the measures to strengthen the 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 ongoing uncertainties in the global and regional economies. The countries approved the introduction of a new lending program, Rapid Financing Facility (RFF), which aims to provide financial support in the event of sudden external shocks such as pandemics or natural disasters. In addition, the member countries agreed to incorporate eligible freely usable currencies (FUC) as RFF’s currency of choice. The governments have committed to launching the REF in the minister’s meeting next year after completing the amendments to the CMIM agreement by the end of this year. 

Furthermore, the member countries agreed on the benefits of transitioning the financing mechanism into a paid-in capital structure. In this regard, they have decided to analyze the advantages and disadvantages of various financing structures and subsequently choose a structure by 2025.

Deputy Prime Minister Choi recognized that the CMIM marks the beginning of cooperation among ASEAN+3 countries in response to regional financial crises. It is also region’s the most significant outcome of this collaboration, noting that this meeting of ministers delivered the crucial decisions in terms of shoring up  the CMIM. 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 and challenges in a timely fashion. The member countries also expressed support for the development of a regional bond market and endeavors to explore new agendas on financial cooperation.