Signing of the Second Bilateral Swap Arrangement between the Bangko Sentral ng Pilipinas and the Bank of Japan, as Agent for the Minister of Finance of Japan under the Chiang Mai Initiative- Second Stage
May 4, 2006
Ministry of Finance of Japan
The Bank of Japan
The Bangko Sentral ng Pilipinas
- The Bangko Sentral ng Pilipinas (BSP) and the Bank of Japan (BOJ), acting as the agent for the Minister of Finance of Japan, signed on May 4, 2006 a second Bilateral Swap Arrangement (BSA) under the Chiang Mai Initiative (CMI). The BSA shall be effective for a three-year period and may be extended by mutual agreement between the BSP and the BOJ, as the agent for the Minister of Finance of Japan. The agreement will enable the two monetary authorities to swap their local currencies (i.e., Philippine pesos or Japanese yen) against US dollars. Under the arrangement, the BSP can swap up to US$ 6 billion while the Minister of Finance of Japan can swap up to US$ 500 million in the event that an immediate need arises that would require balance of payments or short-term liquidity support.
- The BSA between the BSP and the BOJ, acting as the agent for the Minister of Finance of Japan, reflects the measures adopted by the ASEAN+3 Finance Ministers during their meeting on May 4, 2005 in Istanbul, Turkey, in pursuit of the CMI Second Stage. The CMI Second Stage aims to enhance the effectiveness of the CMI as a foreign exchange liquidity support mechanism. The one-way swap between the BSP and the BOJ, acting as the agent for the Minister of Finance of Japan, has been transformed into a two-way swap under the second BSA. The size of the swap commitment of the Minister of Finance of Japan to the two-way swap was increased from US$ 3 billion to US$ 6 billion while the BSP made a new swap commitment of US$ 500 million. The size of the swap that could be withdrawn without an IMF-support program was also increased from 10 percent to 20 percent of the total swap amount. In this BSA, the condition of the swap activation has been linked to Swap Requesting Party's participation in the ASEAN+3 Economic Review and Policy Dialogue.
- The BSP and the BOJ, acting as the agent for the Minister of Finance of Japan concluded their first one-way BSA from Japan to the Philippines amounting to US$ 3 billion in August 2001.
- The new BSA between the Philippines and Japan signals the continued solidarity of the ASEAN+3 member countries in promoting financial stability in the region.