ASEAN+3 Finance Ministers and Central Bank Governors Meeting: Further Enhancing Regional Financial Cooperation

An information source from the Vietnamese Ministry of Finance said the 16^th ASEAN+3 Finance Ministers and Central Bank Governors Meeting convened in Delhi, India. This event took place on the sideline of the Annual Meeting of the Asian Development Bank in the framework of ASEAN+3 cooperation.

 

The meeting was attended by finance ministers, central bank governors, finance - banking officials of ASEAN+3 countries, Deputy Secretary General of ASEAN, President of the Asian Development Bank (ADB), and Director of ASEAN+3 Macroeconomic Research Office (AMRO). Deputy Finance Minister led the Vietnamese delegation to the meeting. Prior to the meeting, deputy ministerial and official meetings of ASEAN+3 countries were organised to prepare contents for the ministerial meeting.

 

Finance ministers and central bank governors exchanged views on recent global and regional economic developments and policy responses. They reviewed the progress of regional financial cooperation achieved since the last meeting, including the Chiang Mai Initiative Multilateralisation (CMIM), the ASEAN+3 Macroeconomic Research Office (AMRO), and the Asian Bond Markets Initiative (ABMI). They also discussed measures to further strengthen our regional financial cooperation in the future.

 

The meeting noted that despite uncertainties in global economies and financial markets, the ASEAN+3 region (10 ASEAN countries plus China, Japan and South Korea) posted steady growth last year and is poised to sustain this momentum in 2013. Resilience and sustainability of the regional economy has been underpinned by robust domestic demand, effective financial intermediation by the healthy banking system, and appropriate macroeconomic policies.  

Global economic and financial conditions have been improving, but finance ministers and central bank governors recognise remaining risks and challenges. Continuing global liquidity infusion could potentially induce excessive risk taking and leverage, credit expansion, and asset bubble. The meeting said finance ministers and central bank governors remain vigilant on the unintended negative side effects stemming from extended periods of global monetary easing on the region as well as on the risk-on, risk-off sentiment in global financial markets that could amplify volatility in capital flows and adversely affect regional financial stability. They are strongly committed to enhancing our efforts to respond to such risks by making the necessary macroeconomic policy adjustments and where appropriate, adopting macro-prudential policies, and by further strengthening financial cooperation in the region.

 

At the meeting, finance ministers and central bank governors passed the amended Chiang Mai Initiative Multilateralisation (CMIM) as agreed in the 15^th meeting on expansion of the scope of CMIM Agreement, which is not only limited to risk-solving functions but also is supplemented crisis-preventing function to strengthen the financial safety net as a way to defend and strengthen market confidence in the regional economy.

 

Compared with current CMIM Agreement, the scale of CMIM foreign exchange reserve pool will increase from US$120 billion to US$ 240 billion. It will also increase from 20 percent the availability of funds for the de-linked IMF portion to 30 percent and 40 percent, depending on conditions. Finance ministers welcomed central bank governors’ involvement in the fundamental decision making process of the CMIM. This participation will ensure that the CMIM is operationally ready and strengthen cooperation of finance ministries and central banks. Finance ministers and central bank governors instructed their deputies to continue work on necessary revisions of the current CMIM Operational Guidelines by the next ASEAN+3 Finance Ministers and Central Bank Governors' Meeting.

 

Finance ministers and central bank governors agreed to transform AMRO to an international organisation and proceed with the necessary domestic processes as early as possible for its prompt signature and entry into force. This will enable AMRO to conduct objective surveillance as a credible, independent international organisation, contributing further to the regional financial stability.

 

After 11 years implementing the Asian Bond Markets Initiative, finance ministers and central bank governors acknowledged the continuous progress under the ABMI in promoting issuance and facilitating demand of local currency denominated bonds, as well as improving the regulatory framework and related infrastructure for the regional bond markets. Against the backdrop of heightened volatility in the global financial market, the efforts under the ABMI to develop efficient and liquid regional bond markets will help alleviate volatilities and contribute to the economic and financial stability in our region.

 

The meeting endorsed the work plan prepared by the ABMI Taskforces for the implementation of the ABMI New Roadmap plus with nine priorities adopted in May 2012. One of the important achievements is the inauguration of the guarantee transaction of the Credit Guarantee and Investment Facility (CGIF) expected to seek more opportunities to provide guarantee to viable bond issuances in the region. Finance ministers and central bank governors also took note of the ASEAN+3 Bond Market Forum (ABMF) and stressed the importance of new public-private round table discussions among market participants, the regulators and policy makers. The meeting also welcomed the completion of the business feasibility reassessment for the establishment of the Regional Settlement Intermediary (RSI) and agreed to set up a cross-border settlement infrastructure forum, which will be based on the voluntary participation of member countries. The meeting also welcomed the completion of the current phase of technical assistance programmes for Indonesia, Laos, Myanmar and Vietnam aiming to narrow the gap between regional bond markets.

 

The next ASEAN+3 Finance Ministers and Central Bank Governors Meeting is set to take place in Astana, Kazakhstan in 2014 under the co-chairmanship of Myanmar and Japan.