The Chiang Mai Initiative (CMI) is the first regional currency swap arrangement launched by the ASEAN+3 countries in May 2000 at an annual meeting of the Asian Development Bank to address the short-term liquidity difficulties in the region and to supplement the existing international financial arrangements. CMI is composed of: (a) the ASEAN Swap Arrangement (ASA) among ASEAN countries, and (b) a network of bilateral swap arrangements (BSAs) among the ASEAN+3 countries.
In 2004, the ASEAN+3 countries proposed to have a more advanced framework for liquidity support which focuses on multilateralisation of the CMI (CMIM). The CMIM is a multilateral currency swap arrangement among the ten (10) members of the Association of Southeast Asian Nations (ASEAN), the People’s Republic of China (including Hong Kong), Japan, and South Korea with the total size of US$240 billion, governed by a single contractual agreement, while the CMI is a network of bilateral swap arrangements among the “Plus Three” and ASEAN-5 4 countries’ authorities.
Established in 28 December 2009 and came into effect on 24 March 2010, the CMIM with a total size of USD 120 billion drawing from a foreign exchange reserves pool will strengthen the ASEAN+3’s capacity to safeguard against increased risks and challenges in the global economy. The core objectives of the CMIM are (i) to address balance-of-payments and short-term liquidity difficulties in the region and (ii) to supplement the existing international financial arrangements.
The amended Chiang Mai Initiative Multilateralisation (CMIM) came into effect on 17 July 2014. The amendment aims to strengthen the CMIM through the following: (i) to double its total size of USD 240 billion from USD 120 billion, (ii) to introduce CMIM Precautionary Line, and (iii) to increase the IMF de-linked portion from 20% to 30%.
