Chiang Mai Initiative

The Chiang Mai Initiative (CMI) is a multilateral currency swap arrangement among the ten members of the Association of Southeast Asian Nations (ASEAN), the People's Republic of China (including Hong Kong), Japan, and South Korea.

[1] The initiative began as a series of bilateral swap arrangements after the ASEAN Plus Three countries met on 6 May 2000 in Chiang Mai, Thailand, at an annual meeting of the Asian Development Bank.

After 1997 Asian Financial Crisis, member countries started this initiative to manage regional short-term liquidity problems and to avoid relying on the International Monetary Fund.

[4] After the crisis, finance ministers of members of the Association of Southeast Asian Nations (ASEAN), the People's Republic of China, Japan, and South Korea met on 6 May 2000 at the 33rd Annual Meeting of the Board of Governors of the Asian Development Bank (ADB) in Chiang Mai, Thailand, to discuss the establishment of a network of bilateral currency swap agreements.

It also implied the possibility of establishing a pool of foreign exchange reserves accessible by participating central banks to fight currency speculation.

"[10] After IMF Managing Director Horst Köhler visited five Asian nations, including Thailand, in June 2000, the Asia Times Online denounced his endorsement of "the ill-conceived and likely never to be implemented Asean plus three [...] currency-swap plan".

[14][15] During the April 2009 meeting of ASEAN finance ministers in Pattaya, Thailand, the individual contributions to be made by each member state toward the reserves pool were announced.

[17][18] When leaders of the thirteen countries finally met in Bali in May, they finalised the individual contributions of China, Japan, and South Korea.

The ASEAN+3 also agreed to adopt the CMIM Precautionary Line (CMIM-PL), which is designed on the model of PPL program within the IMF to prevent the financial crisis.

[46] The Korea Times wrote in an editorial that the country should act as a mediator between China and Japan, whose equal contributions meant that both "should refrain from racing for regional hegemony in the cooperative grouping".

Participants of the Chiang Mai Initiative: regular ASEAN states marked light green; Plus Three states marked green
Former IMF Managing Director Horst Köhler: "Our advice [to the East Asian region] is to pursue regionalisation, not in opposition to the IMF, because the IMF is a global institution, but to do it in a complementary fashion". [ 3 ]