The Chiang Mai Initiative Multilateralisation (CMIM) is a multilateral currency swap arrangement among ASEAN+3 members, which aims to provide financial support to its members facing balance of payments and/ or short-term liquidity difficulties. Each CMIM member is obliged to contribute a certain amount of resources in U.S. dollars to the arrangement, and in return, is entitled to swap its local currency with the U. S. dollar for an amount up to its contribution multiplied by its purchasing multiplier, when in need. To further improve this mechanism, it is necessary to study the feasibility of allowing local currency contributions to the CMIM arrangements.

To strengthen macroeconomic and financial stability in the region, ASEAN+3 countries established a regional financing arrangement called the Chiang Mai Initiative Multilateralization (CMIM) to provide U.S. dollar liquidity through currency swap transactions when members experience balance of payments and/or short-term liquidity difficulties.

Under the Bretton Woods system established in 1944, the U.S. dollar was made the global reserve currency convertible to gold, underlining post war U.S. economic dominance. Even after the Nixon shock that ended US$-gold convertibility and triggered the collapse of the Bretton Woods system in early 1970s, the U.S. dollar has remained the dominant currency for denominating trade and investment globally, including within East Asia.The dominance of the US$ is not just limited to trade and investment between the U.S. and its trading and investment partners, but also in transactions among third parties in which the U.S. is not involved, including within East Asia. For example, in 2017, 66.3% of Thai export to the EU was denominated in US$, a currency that was neither a local currency for the EU or Thailand. Similarly, 58.5% of Thai export to Japan was denominated in US$.

The ASEAN+3 region as a whole is integrating more in terms of trade – the share of intra-regional trade increased steadily to nearly half of total trade by 2016. Yet, the region still relies heavily on the U.S. dollar for trade and investment transactions.