China, South Korea, Japan and ASEAN countries may speed up the creation of an US$80 billion fund to safeguard regional financial stability, a move that reflects increasing concern about US and global financial prospects, analysts said.
South Korea's Deputy Finance Minister Shin Je-yoon was reported as saying on Sunday that the establishment of the fund should be accelerated to prevent the spillover of the US financial crisis to Asia.
Shin said Seoul plans to hold a meeting of the finance ministers of South Korea, Japan and China earlier than originally planned, for May next year, to discuss the scheme.
"It is necessary for the three countries to actively cooperate as the US financial turmoil may spread to the rest of the economy. A possible speed-up of talks on the US$80-billion fund will have a preventive effect," he was quoted as saying.
In May, East Asian finance ministers agreed to upgrade the currency swap scheme to fight regional financial crises, taking them a step closer to creating a full-scale Asian monetary fund.
Japan, China and South Korea agreed to provide 80 percent of the total fund, or US$64 billion, with members of the Association of Southeast Asian Nations, or ASEAN, promising to provide the remaining US$16 billion.
On Friday, South Korean President Lee Myung-bak suggested finance ministers of regional countries meet to coordinate responses to the worsening US financial crisis and the global economic slowdown.
The US has announced a slew of measures to restore market confidence while Asian countries have followed suit to prop up slumping stock markets.
The proposal to accelerate the creation of the US$80-billion fund shows the desire of the region to cooperate more to cope with the crisis, said Sun Lijian, senior economist with Fudan University. "The amount is not big, but it shows the resolve of the region."
The fund will replace the existing arrangement - called the Chiang Mai Initiative - of mainly bilateral currency swaps which came into being in 2000, and transform it into a reserve-pooling mechanism.
(China Daily October 7, 2008)