BNM: Amended Chiang Mai Initiative Multilateralisation comes into effect on March 31

The logo of Bank Negara Malaysia is seen at its headquarters in Kuala Lumpur June 30, 2017. — Picture by Yusof Mat Isa
The logo of Bank Negara Malaysia is seen at its headquarters in Kuala Lumpur June 30, 2017. — Picture by Yusof Mat Isa

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KUALA LUMPUR, April 1 — The amended Chiang Mai Initiative Multilateralisation (CMIM) Agreement, a regional financing arrangement among the Finance Ministers and Central Bank Governors of the Asean member states, China, Japan and Korea (Asean+3), as well as the Monetary Authority of Hong Kong, came into effect on March 31, 2021.

In a statement today, Bank Negara Malaysia (BNM) said among key features of the amendment to the agreement are to increase the International Monetary Fund (IMF) de-linked portion to 40 per cent from 30 per cent to each member’s maximum arrangement amount.

“The IMF de-linked portion is the amount each member may request from the CMIM when there is no matching IMF supported programme.

“The increase in the IMF de-linked portion to 40 per cent of each member’s maximum arrangement amount makes the CMIM more readily available to the countries in need,” it said.

BNM said the second amendment is to institutionalise the use of member countries’ local currencies, in addition to the US dollar, for CMIM financing on a voluntary and demand-driven basis.

“This amendment makes member countries’ local currencies available for the provision of liquidity support under any CMIM arrangement within the CMIM’s total financing capacity of US$240 billion (US$1=RM4.14),” it said.

It said local currency financing under the CMIM would be on a voluntary and demand-driven basis.

The central bank said the third amendment is to address other technical issues, including revisions related to the London Inter-bank Offered Rate (Libor) reform.

“It also addresses other technical adjustments such as information sources for foreign exchange rate determination and the meeting format for the CMIM decision-making body to include flexibility of organising virtual meetings,” it said.

It added that the amendment served to further enhance the CMIM, which stands at the centre of the regional financial safety net of the Asean+3, making it more effective and operationally ready for member economies. — Bernama

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