The Association of Southeast Asian Nations, Japan, China and South Korea agreed Thursday to launch an emergency financing program to deal with future pandemics and natural disasters, in their latest attempt to ensure financial stability in the region.
The envisaged launch of the Rapid Financing Facility comes as the "ASEAN Plus Three" group is seeking to boost the safety net under the Chiang Mai initiative, created in the aftermath of the 1997 Asian financial crisis, to provide liquidity of up to $240 billion in times of emergency.
The agreement was reached at a meeting of senior finance officials from the group held in Kanazawa, Ishikawa Prefecture, in central Japan. After details are worked out, finance ministers and central bank governors from the group are expected to formally endorse it next spring.
"Under the new facility, member nations can swiftly secure funds of up to half of what is allowed under the (Chiang Mai initiative) without conditionality when an emergency funding need arises due to exogenous shocks such as natural disasters and pandemics," Masato Kanda, vice finance minister for international affairs, said.
"As we've seen in Indonesia and the Philippines recently, this region is very much prone to natural disasters and this kind of program is needed," Kanda told reporters.
Indonesia was hit by a series of volcanic eruptions and a major earthquake recently struck the Philippines.
The finance ministers and central bank governors had agreed to explore the launch of a new financing program, based on the view that speed is important in emergency funding. The Chiang Mai initiative, a regional currency swap agreement, was not used in the aftermath of the COVID-19 pandemic.
ASEAN consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, Vietnam and the Philippines.
