South Korea is seeking to create an Asian financial safety next year as part of the Chiang Mai Initiative Multilateralization (CMIM) regime to better insulate the regional economies from a worldwide financial meltdown, the country’s senior economic policymaker said Monday.
Speaking at the G20 global economic cooperation conference hosted by the Korea Development Institute, Finance Minister Bahk Jae-wan said that there is support and sympathy for setting up a regional precautionary credit line (PCL).
The plan calls for the Association of Southeast Asian Nations (ASEAN) members and South Korea, Japan and China to set up a US$120 billion emergency fund to cope with foreign exchange-related financial crisis situations that may occur in the future, according to South Koran (Yonhap) News Agency.
Seoul has been consistently pushing for Asian countries to accept a PCL and the precautionary and liquidity line (PLL), that have been adopted by the International Monetary Fund.
It said that PCL or PLL should be incorporated into the CMIM at the ASEAN plus three ministerial meeting scheduled for May.
Both systems are designed to meet the needs of countries that, despite having sound policies and fundamentals, have some remaining vulnerabilities.
“If South Korea becomes the joint chair of the ASEAN plus three group in 2012, it will do its best to adopt the system,” the minister said. He, however, said it is too early to say if the credit line policy will become a formal topic at the minister-level gathering.
Bahk, also said that South Korea is examining measures to reduce foreign exchange market volatility for its currency, although no concrete measures will be taken immediately.