E. Asia expands emergency liquidity

The ASEAN+3 regional grouping agreed to double the size of their emergency liquidity program and made it more readily available by adding a preemptive function and reducing its compulsory link to the International Monetary Fund's bailout conditions.

A heightened sense of urgency due to the eurozone crisis helped the 13 countries strike an agreement that South Korean Finance Minister and co-chair Bahk Jae-wan described as the most noteworthy in the grouping's more than 10-year history.

In a further move to protect their financial markets from shocks, the three economic powers agreed to boost cross-investment in government bond markets, worth nearly a combined US$15 trillion.

The series of agreements come as many of the export-oriented economies in the region seek ways to avoid a repeat of the 1997-98 Asian Financial Crisis after facing recent crises originating outside their part of the world.

“We are fully aware of the potential downside risks to the region's economic performance in 2012,” said the statement by the ASEAN+3 finance ministers and central bank chiefs, who met in Manila on the sidelines of the Asian Development Bank meetings.

“The prolonged sovereign debt crisis in the eurozone could continue to weigh on ASEAN+3 economies through trade and financial channels. Inflationary pressures remain, driven, in particular, by rising oil prices.”

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