• Kyodo

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Finance ministers from 13 Asian countries will declare after their meeting Wednesday that progress has been made toward creating a mutual network of currency swaps, according to a draft of their joint statement.

The statement says they “are pleased to note the significant progress in bilateral negotiations on the bilateral swap arrangements” under a 13-nation accord reached a year ago.

Under the Chiang Mai Initiative, the 10-member Association of Southeast Asian Nations plus Japan, China and South Korea are committed to working toward bilateral pacts to create a regional currency swap network based on an existing $1 billion ASEAN swap mechanism.

The planned network is aimed at bolstering East Asian nations’ defenses against the kind of speculative attacks that led to the Asian financial crisis in 1997 and 1998.

The speculators were betting against the area’s pegged exchange rates, most of which have been abandoned.

After Wednesday’s gathering of finance ministers, a series of bilateral currency swap deals were expected to be unveiled.

The draft statement also says the East Asian finance ministers will agree to review the Chiang Mai Initiative in three years to assess the effectiveness of the bilateral swap arrangements.

Noting the importance of enhanced monitoring of the economic situation in the region to get the bilateral swap deals rolling, they will order their deputies to study how to enhance the effectiveness of their economic reviews and policy dialogues.

On the monitoring of capital flows, they will reaffirm the importance of closely tracking capital movements within and outside East Asia, detecting unusual trends and taking proper action to mitigate their adverse effects, the statement says.

The statement also welcomes Japan’s offer of technical assistance to member countries to help strengthen their capacity to gather data on capital flows.

ASEAN consists of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

Finance ministers from ASEAN members, Japan, China and South Korea will be meeting this week on the sidelines of an annual ministerial meeting of the Asian Development Bank taking place this week.

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