ASEAN: A Liquidity Fund Emerges from the CMI

The Association of Southeast Asian Nations (ASEAN) and its three dialogue partners Japan, China and South Korea formally agreed May 3 to establish a liquidity crisis fund worth $120 billion. States will be able to draw on the fund for immediate liquidity support in times of heightened foreign-exchange risk to prevent a recurrence of the 1997-1998 Asian financial crisis (or a future Asian version of the 2008-2009 liquidity crisis that struck the Western world). The fund will be a significant (albeit limited) step toward greater Asian interdependence — which really means greater Japanese and Chinese influence in the region and reduced dependency on the West.