Asian Ministers Agree to Pool $80 Billion of Reserves

Discussion in 'Forex' started by ASusilovic, May 4, 2008.

  1. Finance ministers from 13 Asian nations agreed to create a pool at least $80 billion in foreign- exchange reserves to be tapped by nations in case they need to protect currencies.

    Contributions from Japan, China and South Korea will total 80 percent of the pool, while the 10-member Association of Southeast Asian Nations will make up the rest, the ministers said in a statement after talks in Madrid, where the Asian Development Bank is holding its annual meeting.

    Asian governments are trying to avoid relying on institutions like the International Monetary Fund, which forced them to adopt harsh economic policies in return for bailouts during the financial crisis a decade ago. Pooling of foreign reserves may help prevent a repeat of the region's turmoil.

    All 13 nations will contribute to the fund, and they will still manage their own reserves under the arrangement. Exact contributions have yet to be decided. Today's talks involved Japanese Finance Minister Fukushiro Nukaga, China's Xie Xuren, South Korea's Kang Man Soo and their counterparts from Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

    Ministers last year agreed to set aside part of their $3.4 trillion of foreign reserves for emergencies, without deciding the size of the pool and when they would start the fund. The nations decided to accelerate discussions on the details of borrowing conditions, the statement said.

    `Appropriate Actions'

    On the economy, Asian governments ``confirmed the importance of taking appropriate actions'' to sustain economic activity, the statement said.

    ``The regional economy has continued its strong growth and is forecast to remain robust although somewhat weaker,'' the statement said. ``Nonetheless, several risks remain such as further worsening of the growth prospects, vulnerability of financial markets, and continued inflationary pressures from rising oil and non-oil commodity prices.''

    Crude oil has soared, and rice prices have more than doubled since Asian finance ministers met a year ago in Kyoto, Japan. The increases have stoked social tensions and led to wider fiscal deficits as governments subsidize food and energy costs for their people.

    http://www.bloomberg.com/apps/news?pid=20601068&sid=a_oRFS0lRIuc&refer=home

    $3,4 trillion in reserves...how much is that of overall global central bank reserves ? :confused: