The Chiang Mai Initiative Multilateralisation (CMIM) has been designed to provide U.S. dollar liquidity support in response to urgent short-term liquidity difficulties and/ or balance of payments difficulties experienced by any ASEAN+3 member. Currently ASEAN+3 region remains fairly exposed to negative spill-over effects due to over-reliance on the U.S. dollar while local currency usage has shown an upward trend in the region. All these laid the ground for exploring the possibility of providing members with the choice of local currency contribution in addition to the U.S. dollar contribution, as one option to enhance the effectiveness of CMIM crisis financing.
In this context, AMRO has conducted a research collaboration program on local currency contribution to the CMIM, jointly with four scholars from the ASEAN+3 region. The purpose of this research is to explore the plausibility of local currency contribution to the CMIM and to examine the possible modality, based on regional integration and cross-border local currency usage in the region. Chapter 1 is a summary of this research and Chapter 2 examines recent developments in local currency usage in the context of regional economic and financial integration. Chapter 3 focuses on policies to promote the greater use of regional currencies in the region. Chapter 4 assesses the plausibility of local currency contribution to the CMIM. Finally, Chapter 5 explores the possible modality and key practical issues related to the implementation of local currency contribution to the CMIM.