Agreement of the second Bilateral Swap Arrangement between Japan and Thailand under the Chiang Mai Initiative
January 25, 2005
Ministry of Finance of Japan,
Bank of Japan,
Ministry of Finance of Thailand,
and Bank of Thailand
- The Bank of Japan, acting as the agent of the Minister of Finance of Japan, and the Bank of Thailand agreed to reach the second bilateral swap arrangement under the Chiang Mai Initiative of the ASEAN+3 Finance Ministers' Process.This will enable both countries to swap their local currencies (i.e., either Thai baht or Japanese yen) against US dollars (up to 3 billion US dollars) between the two monetary authorities in need of short-term liquidity.
- This arrangement features the two-way swaps, in which both Japan and Thailand will provide US dollars through currency swaps upon request from each other.This shows an equal partnership between Thailand and Japan, and symbolizes the significant economic and financial development and the deepening regional financial cooperation in East Asia.
- The Chiang Mai Initiative was agreed at the ASEAN+3 Finance Ministers' Meeting in May 2000 in Chiang Mai, Thailand, to prevent such a difficult situation as the Asian Currency Crisis in 1997-98.It aims to create a "network of bilateral swap arrangements", by which short-term liquidity will be provided to support participating ASEAN+3 countries in need.
- The network of bilateral swap arrangements has been created among China, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore and Thailand.Between Japan and Thailand, the first bilateral swap arrangement was reached on July 30, 2001, which stipulated a one-way provision of short-term liquidity from Japan to Thailand.
- The Chiang Mai Initiative is now under review at the ASEAN+3 Finance Ministers Process with a view to enhancing its effectiveness of self-help mechanism among members.Once the review is completed, the second bilateral swap arrangement will be revised in accordance with the agreement.