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March 25, 2010

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Home » Business » Economy

Currency swap pact comes into operation

A currency swap agreement between China, Japan, South Korea and the 10-member Association of Southeast Asian Nations came into effect yesterday.

The pact, or the Chiang Mai Initiative Multilateralization agreement, totaled US$120 billion, said a statement posted yesterday on the Website of the People's Bank of China.

It was signed in December last year by finance ministers and central bank governors of ASEAN and the three nations as well as the Hong Kong Monetary Authority.

The pact provides financial support to the participant countries which face short-term liquidity shortages, the statement said.

Under the pact, the three nations and ASEAN will be able to swap their currencies with US dollars for an amount proportionate to their contribution to the regional reserve pool in case of a liquidity shortage, the statement said.

China and Japan contributed US$38.4 billion each to the pool and South Korea gave US$19.2 billion. ASEAN provided a combined US$24 billion, the statement said.

ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.


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