East Asia to launch $120 billion crisis fund in March

Fourteen East and Southeast Asian economies said on Monday they have signed a plan to set up a $120 billion emergency fund known as the Chiang Mai Initiative, Asia's first move to devise a safety net to shield itself from a financial crisis.                                           

Japan, China, South Korea, Hong Kong and the 10 members of the Association of Southeast Asian Nations (ASEAN) will be entitled to swap their local currencies into US dollars for up to a pre-set amount by each party, they said in a joint statement.

"The core objectives of the CMIM are to address balance of payment and short-term liquidity difficulties in the region and to supplement the existing international financial arrangements," the statement said, referring to the Chiang Mai Initiative Multilateralization (CMIM), the official name of the deal.                                           

South Korea said means the fund would take effect in March 2010, adding further negotiations were needed on a proposed surveillance unit, which will play the role of a control station.

The ASEAN Plus Three first agreed in May to set up the fund by transforming a network of mostly bilateral currency swap arrangements between the member economies, valued at $78 billion, into a single $120 billion pool of funds committed by the members.