The finance chiefs of 13 Asian countries, including South Korea, on Thursday agreed on a preliminary framework to strengthen regional currency swap agreements, with aims to avoid overreliance on the US dollar.

According to the Bank of Korea, the consensus was reached during the 22nd ASEAN Plus Three Finance Ministers’ and Central Bank Governors’ Meeting held in Nadi, Fiji.

The ASEAN+3 is a regional body consisting of the 10 Association of Southeast Asian Nations members as well as Korea, China and Japan.

Their meeting this year centered on strengthening the Chiang Mai Initiative Multilateralization scheme, a multilateral currency swap arrangement among the 13 member states.

The CMIM came into force in 2010, as a means of addressing balance of payments and short term liquidity difficulties in the region in times of financial crises, by allowing members to access a pool of dollars in exchange for their own currencies. The scheme evolved from the Chiang Mai Initiative, the first regional currency swap arrangement formed in 2000, following the 1997 Asian Financial Crisis.

At its latest meeting, the ASEAN+3 agreed on preliminary guidelines for adding local currencies -- such as the Japanese yen and Chinese yuan -- to the safety net. The shift would help lower their reliance on the dollar, while elevating the clout of Asian currencies.

The joint statement recognizes “the growing demand for local currency usage in cross-border transactions in the region” and that “local currency contribution to the CMIM can be one option to enhance it.”

The ASEAN+3 did not specify which currencies would be eligible for contribution to the CMIM, saying the usage criteria and other details would be agreed upon by the CMIM members in the future.

However, they noted that the local currency contribution to the CMIM should be “demand driven” as well as designed and implemented on a voluntary basis for both the requesting and providing parties. The exchange rate should also be agreed upon bilaterally between the two parties.

In a separate trilateral meeting, the finance ministers and central bank governors of China, Japan and Korea pledged to work together to resist protectionism and uphold an open multilateral trade and investment system.

The agreements came from the 19th Trilateral Finance Ministers’ and Central Bank Governors’ Meeting to discuss regional financial cooperation, the BOK said.

Korea, China and Japan vowed to work together to fight downward economic risks, while “resisting all forms of protectionism, upholding an open and rule-based multilateral trade and investment system and accelerating intraregional trade and investment activities.”

Attending the Fiji-based meetings from Korea were Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki and Bank of Korea Gov. Lee Ju-yeol. Hong is also set to participate in an annual meeting of the Asia Development Bank on Friday.

The 10 ASEAN members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

By Sohn Ji-young (jys@heraldcorp.com)