An East and Southeast Asian equivalent to the International Monetary Fund is expected to be launched as early as this spring, tasked with keeping watch on risks in the region such as a collapsing currency.
The Singapore-based ASEAN+3 Macroeconomic Research Office, or AMRO, an independent body formed in April 2011 by the 10 member states of the Association of Southeast Asian Nations plus Japan, China and South Korea, will likely be upgraded into an official international organization.
Japan, which has led AMRO, hopes that the upgraded institution will play a role similar to that performed by the IMF. Whether this happens may depend in part on what backing China decides to give to the project.
AMRO was set up in April 2011 based on the lessons of the Asian financial crisis in the late 1990s. Member countries dispatch experts to it for research on Asian economics and finances.
In the event of a currency crisis, AMRO will issue recommendations for the 13 member nations to invoke their Chiang Mai initiative, a mechanism to supply hard currency jointly in a crisis.
For AMRO to be formally recognized as an international organization, a pact must take effect after approval by the members’ legislatures. The Diet has already given its consent, and approval procedures in other countries are likely to be completed by spring, sources familiar with the situation said.
If it is to strengthen its presence, AMRO would need to boost its research and analysis capabilities through cooperation and the sharing of information with institutions such as the IMF.
Following the U.S. Federal Reserve’s first interest rate hike in more than nine years last month, concerns about a currency crisis have been growing among emerging economies. Some warn of an exodus of funds and selling pressures on their currencies.
Against this background, there are growing hopes that AMRO can nip crises in the bud.
Some emerging economies in Asia distrust the IMF after it required them to impose austerity measures in exchange for financial aid following currency crises in the 1990s.
In this regard, a senior official at Japan’s Ministry of Finance expressed the hope that AMRO becomes an effective player, saying Asian nations will find it easier to listen to opinions from an institution based in the region.
China, which has been boosting its presence in the international financial arena, may be central to the body’s future. Last year, Beijing led work to establish the Asian Infrastructure Investment Bank, and the yuan was added to the basket of currencies that sets the value of the IMF’s special drawing rights, an international reserve asset to supplement IMF member states’ official reserves.
Given that China has invested the same amount of money in AMRO as Japan, the functions of the Asian version of the IMF would fall short of Japan’s vision if Beijing stops short of full-fledged cooperation, analysts said.
Some pointed to the need for Japan to foster experts on international financial issues to enhance the role AMRO plays.
AMRO is currently headed by former Ministry of Finance official Yoichi Nemoto. AMRO’s research findings are reported to meetings of finance ministers and central bank chiefs of the 10 ASEAN countries, plus Japan, China and South Korea.
Japan and China each have put up 32 percent of AMRO’s capital. Of the remainder, 16 percent has been contributed by South Korea and 20 percent by the 10 ASEAN members.