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    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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    Citable URI
    http://hdl.handle.net/11540/10572
    Metadata
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    KIEPStaffPaper14-06.pdf (1019.Kb)
    Author
    Park, Young-Joon
    Theme
    Finance
    Regional
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise