A Proposal for a New Regional Financial Arrangement: The Reserve Liquidity Line
Park, Young-Joon | December 2014
Abstract
This paper examines the limitations of the Chiang Mai Initiative Multilateralization (CMIM) as a regional financial safety net in East Asia, and proposes a new regional financial arrangement. To overcome the drawbacks of the CMIM, which has never been activated so far, a new regional financial arrangement suggests that ASEAN+3 members establish a regional reserve system based on a supranational regional reserve asset. The new regional financial arrangement, so-called ‘Reserve Liquidity Line’ (RLL), guarantees a degree of automaticity in liquidity facility, based on upfront funding instead of pledge funding. As a backdrop of the regional reserve system, some market movements have been manifested to reduce excessive U.S. dollar dependency in East Asia and to enhance the use of local currencies. Establishing the RLL mechanism could find a way of making up for the weak points of the CMIM and responding to the regional needs for effective regional financial arrangements. The proposed operational mechanism of RLL comprises (i) institution building of ‘ASEAN+3 Reserves System’ (ARS) to manage the ‘Regional Reserves Asset’ (RRA), (ii) an Operations Account and a Substitution Account, and (iii) a sort of basket exchange rate for RRA valuation.
Citation
Park, Young-Joon. 2014. A Proposal for a New Regional Financial Arrangement: The Reserve Liquidity Line. © Korea Institute for International Economic Policy. http://hdl.handle.net/11540/10572.Keywords
Public Finance
Project Finance
Private Finance
Nonbank Financing
Non-Bank Financial Institutions
Municipal Finance
Local Government Finance
Local Currency Financing
Limited Resource Financing
International Financial Institutions
Infrastructure Financing
Industrial Finance
Government Financial Institutions
Government Finance
Financing of Infrastructure
Financial Sector Development
Financial Regulation
Development projects
Physical infrastructure
Soft infrastructure
Infrastructure finance
Infrastructure bonds
Trade Finance
Rural Finance
Regional Development Finance
Risk Financing
Regional Development Finance
Public Finance
Infrastructure Financing
Financing of Infrastructure
Financial Security
Financial Intermediation
Finance And Trade
Enterprise Financing
Asian Development Bank
Development
Regional Economic Integration
Financial Sector Policies
Financial Risk Management
Bond Financing
ADB
Self Financing
Aid Financing
Financial Aid
Development Banks
International Monetary Relations
Local Finance
Banks
Capital Market
Financial statistics
Economic integration
Development Bank
Capital Market
Regional Plans
Regional Development Bank
Development finance
Municipal Bonds
Bonds
Grants
Loans
Development Banks
Local government bonds
Bonds
Catastrophe bonds
Bond funds
Bond market
Multilateral development banks
Mentoring in business
Trade routes
Bills of exchange
Swaps
International banks and banking
Capital movements
Central banks and banking
Bills of exchange
Swaps
Banks and banking
Stock exchanges
Market
Exchange
Balance of trade
Cyber Security
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