The central banks of Japan and Indonesia signed an agreement Wednesday for Tokyo to provide Jakarta with up to $6 billion in the event of a financial crisis, the Finance Ministry said.
The accord, which doubles the size of the initial agreement signed in February 2003, allows the Bank of Japan and Bank Indonesia to swap dollars for Indonesian rupiah in the event Indonesia is in need of short-term liquidity.
The accord brings the number of bilateral currency-swap agreements under the Chiang Mai Initiative to 17 deals with eight Asian countries for a total of $52.5 billion.
The initiative has created a network of bilateral currency-swap arrangements among the central banks of Japan, China, Indonesia, South Korea, Malaysia, the Philippines, Singapore and Thailand to fight “speculative attacks” on their currencies.
The move was intended to avert financial turmoil similar to the Asian financial crisis in 1997 and 1998.
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