Following the outflow of portfolio capital away from emerging markets in the first quarter, the Bangko Sentral ng Pilipinas believes there is scope to further increase the amount of the currency swap arrangement among Asean+3 countries.
Under the arrangement, called the Chiang Mai Initiative Multilateralization (CMIM), member countries are scheduled to increase this year the standby dollar fund from $120 billion to $240 billion.
BSP Deputy Governor Diwa Guinigundo said, however, that central banks in the region might find it prudent to further increase the fund given the outflow of foreign portfolio capital that emerging markets witnessed earlier this year.
The standby fund, established in 2010, is meant to help any member-country solve or prevent a balance of payments (BOP) crisis.
“There is greater volatility in the market. The fact that [dollar] reserves of individual countries have risen over the years, they have the capability to increase their contributions to the fund,” Guinigundo told reporters yesterday at the sidelines of an Asian Development Bank forum. Michelle V. Remo