Expanded Asian currency swap deal takes effect

An expanded currency swap arrangement among Japan, China, South Korea and 10 Southeast Asian countries took effect Thursday, the Japanese Finance Ministry announced.
The amended regional financial cooperation, known as Chiang Mai Initiative Multilateralization (CMIM) Agreement, doubled the size of the currency swap to USD 240 billion from USD 120 billion, the ministry said.
The revised agreement also introduced precautionary line and increased the International Monetary Fund (IMF) de-linked portion from 20 percent to 30 percent.
"This amendment will strengthen the regional safety net for the participants in responding to potential or actual balance-of-payments and short-term liquidity difficulties," the ministry said.
The ASEAN-plus-three forum comprises Japan, China and South Korea and the 10 ASEAN member states -- Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam - launched the Chiang Mai Initiative Agreement in March 2010, a safety net to help the nations involved fight speculative attacks on their currencies.
The currency swap is a device useful in times of economic stress, when normal foreign exchange markets can seize up, in which financial authorities agree to buy local currency with something much more liquid -- usually the US dollar.