ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

ASEANSubscribe to ASEAN

Coping with Capital Account Crises

Selected east Asian countries have recently agreed to create a network of bilateral currency swaps and repurchase agreements as a 'firewall' against future financial crises. Termed the Chiang Mai Initiative (CMI), it is aimed at providing countries facing the possibility of a liquidity shortage with additional short-term hard currencies and encompasses all ASEAN countries as well as China, Japan and Korea. We will have to wait and see if and how monetary cooperation in east Asia progresses, but to the extent such regional arrangements help to reinvigorate interest in strengthening the international financial architecture, they could act as stepping stones towards multilateral reforms rather than as stumbling blocks.

Going It Alone

While the Asean-plus-one arrangement should assist India in getting a stronger footing in south-east Asia, Indian policy-makers need to be fully cognisant of the many initiatives and developments that are currently under way in the trade and investment spheres in Singapore and other countries of the region and respond to them appropriately if the 'look east' policy is to be successful.


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