East Asian Economic Integration
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East Asian Economic Integration

Law, Trade and Finance

Edited by Ross P. Buckley, Richard Weixing Hu and Douglas W. Arner

This book analyses recent developments and likely future paths for trade and financial integration in East Asia. It suggests a more coherent, balanced way forward for regional economic integration and analyses implications for institution building in East Asia.
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Chapter 11: Institutional Completeness in the Chiang Mai Initiatives

Paul Lejot


Paul Lejot INTRODUCTION The Multilateralized Chiang Mai Initiative (CMIM) announced in 2009 is an emergency credit agreement made by ASEAN+3 finance ministers and central bank governors.1 Their use as counterparties is practical since they often have day-to-day control of foreign currency reserves and domestic monetary policy.2 It also has tactical value in keeping with accepted practice, by allowing disclosure of no more than the headlines of the agreement. Although rooted in Asia’s experience of receiving IMF credit in the regional financial crisis of 1997–98, CMIM is not institutionally developed in consisting of rules of the detail associated with IMF practice for credit, surveillance or the obligations of members. It represents an advance in technical and policy collaboration within the region but of a kind not customary among OECD central banks since 1999. An agreement to create CMIM was executed on or around 28 December 2009 and took effect on 24 March 2010. The undisclosed document comprises 24 articles and nine schedules but may resemble a commercial heads of agreement,3 leaving the exact nature of credit and reserve pooling commitments and any single transaction to be agreed and executed later. 1 Including also the head of the Hong Kong Monetary Authority (HKMA); See Table 11.1. See Joint Press Release [of CMIM member central banks], ‘Chiang Mai Initiative Multilateralization Comes Into Effect’, 24 March 2010, accessed 2 September 2010, http://www.bot.or.th/Thai/PressAndSpeeches/Press/News2553/ n1053e.pdf; ASEAN+3 Finance Ministers’ statement, 2 May 2010, accessed 2 September 2010, http://www.aseansec.org/documents/JMS_13th_AFMM+3.pdf, and Annex 1,...

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