May 4th, 2009, 12:16 am
Asian Nations Unveil $120 Billion Liquidity Fund - WSJ May 4"BALI, Indonesia -- Ministers from across Asia agreed to set up an emergency $120 billion liquidity fund that 13 Asian nations can tap to help counter the global financial crisis.At the Asian Development Bank's annual meeting here, finance officials also said Asian governments must spend more on social safety nets and reduce their reliance on export-driven growth, as they grapple with the economic meltdown.Japan, South Korea and China on Sunday agreed with the Association of Southeast Asian Nations, or Asean, on most aspects of the liquidity fund, called the Chiang Mai Initiative, including country contributions, borrowing accessibility and surveillance mechanisms.The initiative aims to create a network of bilateral currency-swap arrangements among Asean and the three East Asian countries. Asean includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.Japan, South Korea and China will provide 80% of the $120 billion currency pool and Asean members the remaining 20%. Japan will contribute $38.4 billion, while China, including Hong Kong, will also offer $38.4 billion. South Korea will provide $19.2 billion.Under terms of the program, smaller Asian economies will be able to borrow larger amounts in proportion to their contributions than the more-developed economies.The ministers also unveiled a $500 million credit-guarantee and investment mechanism, which will be used to enhance the credit ratings of companies that want to issue debt.Separately, Japan, Asia's largest economy, said it will provide up to six trillion yen, or about $60 billion, to Asian nations via emergency swap agreements. The Japan Bank for International Cooperation also will guarantee Samurai bonds of up to 500 billion yen issued by Asian countries. Samurai bonds are yen-denominated bonds issued in Japan by foreign countries or companies."...