KYOTO — Finance ministers from the Association of Southeast Asian Nations along with Japan, China, and South Korea on Saturday hammered out a basic agreement to pool some of the region's $2.7 trillion in foreign reserves to prevent the kind of currency runs that led to the Asian financial crisis a decade ago.
"Proceeding with a step-by-step approach, we unanimously agreed in principle that a self-managed reserve pooling arrangement governed by a single contractual agreement is an appropriate form of multilateralization," the finance ministers said in a joint statement following their meeting in Kyoto.
Under current agreements enacted in 2000 under the Chiang Mai Initiative, only bilateral currency swaps are permitted, which means that a country seeking to swap multiple currencies has to obtain permission from each individual partner country, a time-consuming process.