The amended Chiang Mai Initiative Multilateralisation (CMIM) Agreement, which is a regional financing arrangement among the Finance Ministers and Central Bank Governors of the ASEAN member states, China, Japan and Korea (ASEAN+3) and the Monetary Authority of Hong Kong, China, came into effect on 31 March 2021.
The key features of the amendment to the CMIM Agreement are as follows:
- To increase the International Monetary Fund (IMF) De-linked Portion from 30% to 40% of each member’s maximum arrangement amount.
- The IMF De-linked Portion is the amount each member may request from the CMIM when there is no matching IMF supported programme. The increase in the IMF De-linked Portion to 40% of each member’s maximum arrangement amount makes the CMIM more readily available to the countries in need;
- To institutionalise the use of member countries’ local currencies, in addition to the U.S. dollar, for CMIM financing on a voluntary and demand-driven basis.
- The amendment makes member countries’ local currencies available for the provision of liquidity support under any CMIM arrangement within the CMIM’s total financing capacity of USD240 billion. Local currency financing under the CMIM will be on a voluntary and demand-driven basis; and
- To address other technical issues, including revisions related to the London Inter-bank Offered Rate (LIBOR) reform.
- It also addresses other technical adjustments, such as information sources for foreign exchange rate determination and the meeting format for the CMIM decision-making body to include flexibility of organising virtual meetings.
The amendment serves to further enhance the CMIM, which stands at the center of the regional financial safety net of the ASEAN+3, making it more effective and operationally ready for member economies.
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