Asia and the CMIM in the Evolving International Monetary System

2019-01-31T22:10:21+00:00March 28, 2018|Thematic Studies|

Asia and the CMIM in the Evolving International Monetary System

Concerted reforms following the Asian Financial Crisis and strong accumulation of foreign exchange reserves fortified the region against the headwinds from the Global Financial Crisis. However, with the international financial system set to grow in size and complexity, financial crises will undoubtedly recur in the future. A pragmatic approach to global crisis management is to address spillovers by further strengthening the Global Financial Safety Net. For the ASEAN+3 members, buffers at the regional level are sizable, in the form of foreign exchange reserves and Bilateral Swap Arrangements. However, the support available to some of the smaller members is still quite thin across the various facilities. With the Chiang Mai Initiative Multilateralisation (CMIM) as the center of the Regional Financial Safety Net, the effectiveness of the regional mechanism could be enhanced. This paper analyzes why the CMIM should be strengthened to support macroeconomic and financial stability in Asia.

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