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Asian nations agree to currency plan to stave off future crises |
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May 7, 2000
CHIANG MAI, MAY 6 (AP) - Thirteen Asian nations agreed Saturday to support each other's currencies to stop an economic crisis like the one that devastated the region in 1997 and 1998 from getting out of control again.
Economic powers Japan, China and South Korea decided to take a role in the fledgling currency protection scheme adopted two months ago by the 10-member Association of Southeast Asian Nations, part of a wider aspiration to create a more united Asia on the world economic stage.
The agreement, dubbed the Chiang Mai Initiative after this city in northern Thailand, will lead to the countries swapping their currencies with each other in a repurchase scheme that would be unholstered in the event of speculative attacks or other currency problems.
The finance ministers of the Southeast Asian nations and the three Northeast Asian giants met on the sidelines of the annual meeting of the Asian Development Bank, a Manila-based institution some Asian officials would like to see become a lender of last resort to troubled nations.
In a statement afterward, the ministers said the currency-swap arrangement would help get a better grip on capital flows and establish "a well-coordinated economic and financial monitoring system in East Asia."
It would complement existing international facilities, the statement said, acknowledging the likely opposition from the United States if a deal eventually led to an attempt to replace the Washington-based International Monetary Fund.
Japan's proposal to create an Asian monetary fund when the economic crisis erupted in 1997 was shot down by Washington, but support for one in Asia stayed strong after the IMF was judged by many countries - and its own experts - to have responded badly and making the recession worse.
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