Currency swap agreement effective

A currency swap agreement between China, Japan, the Republic of Korea and the 10-member Association of Southeast Asian Nations has come into effect. The Chiang Mai Initiative Multilateralization agreement totals 120 billion U.S. dollars.

Under the agreement, signed in December, participating countries will be able to swap their currencies with U.S. dollars. They can exchange them for an amount proportionate to their contribution to the regional reserve pool in case of a liquidity shortage.

China and Japan contributed 38.4 billion U.S. dollars each to the liquidity pool and the ROK offered 19.2 billion U.S. dollars. The 10 ASEAN nations provided a combined 24 billion U.S. dollars.