Policymakers in the Association of Southeast Asian Nations (Asean) and their richer East Asian counterparts have signed an agreement to strengthen a regional think tank for the early detection of weaknesses in individual countries.
In a statement, the Bangko Sentral ng Pilipinas (BSP) announced the signing of a new agreement to transform the Asean+3 Macroeconomic Research Office (AMRO) into an international organization.
“This is expected to enable AMRO to conduct objective surveillance contributing further to regional financial stability,” the BSP said.
This is in line with the recent strengthening of the Chiang Mai Initiative Multilateralization to better protect the region from external shocks.
The deal was signed by the 10 members of the Asean and its “plus three” partners, namely, China, Japan, and South Korea. Hong Kong was also part of the new deal.
The Chiang Mai Intiative is a multilateral currency swap arrangement among Asean+3 members, which became effective on March 24, 2010, having developed from the CMI bilateral swap network.
Currency swap deals mean countries can call on its neighbors to provide foreign currencies in case of balance-of-payments crises.
Balance-of-payments crises take place when sources of foreign exchange income of a country—such as investments, foreign trade, or in the case of the Philippines, remittances from migrant workers—dry up.
Economies need a steady supply of foreign exchange to do business with the rest of the world, for things such as paying for imports or meeting external obligations.
Established in April 2011 as a limited company, AMRO serves as the regional macroeconomic surveillance unit of the Chiang Mai Initiative.
AMRO’s purposes are to monitor and analyze regional economies and to contribute to early detection of risks, swift implementation of remedial actions and effective decision-making under the Chiang Mai Initiative.
About $240 billion is available to participants of the Chiang Mai Initiative.
The agreement to strengthen AMRO was done at the sidelines of the International Monetary Fund and World Bank autumn meetings in Washington DC last week.