The Asian Monetary Fund (AMF) “could be the next step” for Malaysia in strengthening regional financial cooperation, said Bank Negara Malaysia (BNM) governor Tan Sri Nor Shamsiah Mohd Yunus.
Shamsiah highlighted that there have already been several initiatives since the Asian Financial Crisis to strengthen regional self-help mechanisms and foster regional financial stability.
“This is not something that is new. We have been promoting (the use of local currency) because (it) gives businesses a wider range of options to do settlement and can reduce the cost of business,” she said during BNM’s release of the first quarter GDP results today (May 12).
These initiatives include the Chiang Mai Initiative Multilateralisation Agreement (CMIM) and the Asean+3 Macroeconomic Research Office (AMRO).
“Asean, together with the plus three (countries) – Korea, Japan and China – have come together to see how best to continue to have an efficient arrangement regionally,” said Shamsiah.
The governor emphasised that BNM would continue to look at improving the efficiency and effectiveness of such agreements in order to serve the region well, and avoid a repeat of the Asian Financial Crisis.
“Malaysia is one of the pioneer countries in terms of promoting the use of local currency to settle trade and investment,” she added.
AMRO is a regional macroeconomic surveillance organisation that aims to promote macroeconomic and financial stability in the Asean+3 region, with the three extra countries being China, South Korea and Japan.
Meanwhile, the CMIM agreement, which came into effect in 2010, was a multilateral currency swap agreement to provide liquidity support between the ASEAN+3 nations. It has since been amended and enhanced from time to time.
The core objectives of the CMIM are to address balance-of-payment and short-term liquidity difficulties in the region, and supplement existing international financial arrangements.
Malaysia has signed a local currency framework with both Thailand and Indonesia, and was amongst the first to sign a swap agreement with China to use yuan to settle trade and investment between the two nations.
On Thursday (May 11), Prime Minister Datuk Seri Anwar Ibrahim reiterated his call for the establishment of an Asian Monetary Fund in line with Asean’s initiative to boost the regional economic independence and safety net.
He said such a regional mechanism would be able to better understand the realities and needs of Asean member countries and thus propose more suitable remedial measures.
The initiative, he said, would enhance the use of local currencies to support cross-border trade and investment in Asean.
