ASEAN, Japan, China and South Korea collaborate to secure funds for pandemics and disasters

ASEAN, Japan, China, and South Korea agreed to establish a mutual fund provision mechanism, enhancing financial assistance during emergencies.

The Association of Southeast Asian Nations (ASEAN) and Japan, China, and South Korea agreed on Friday to establish a mutual fund provision mechanism. This mechanism will allow these countries to provide financial assistance to one another during emergencies, such as pandemics and natural disasters. This new arrangement builds upon their existing currency swap arrangements, which involve the exchange of the U.S. dollar and their respective currencies.

Asian finance ministers and central bank governors convened on the sidelines of Asian Development Bank events in Tbilisi, Georgia, amid a period of dollar strength due to aggressive anti-inflation measures.

Japanese Finance Minister Shunichi Suzuki stated that Asia is prone to natural disasters and ASEAN nations, in particular, have had high hopes for the new facility that would enable them to respond quickly to external shocks. He made these remarks during a press conference after the meeting. Suzuki said their agreement on the launch is a major accomplishment, citing the need for cooperation to ensure financial stability.

The “ASEAN Plus Three” group, comprising the Association of Southeast Asian Nations, Japan, China, and South Korea, has agreed to strengthen their financial safety net under the Chiang Mai Initiative. This initiative was established in the wake of the 1997 Asian financial crisis to provide emergency liquidity during crises.

The COVID-19 pandemic has highlighted the growing need for swift response to funding requirements and enhanced financial cooperation among these nations. Consequently, the group has decided to bolster their mechanism to swiftly provide funds to members facing emergencies such as pandemics or natural disasters. This move builds upon their existing currency swap arrangements aimed at stabilizing financial markets.

Ahead of their upcoming leaders’ summit in Tokyo in July, Japan and 11 Pacific island nations, including ASEAN members Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, held their inaugural finance ministers’ meeting, discussing various issues like climate change and debt sustainability.