The Chiang Mai Initiative Multilateralization: Origin, Development and Outlook

Abstract

This paper discusses the Chiang Mai Initiative Multilateralization (CMIM) – its origin, development, and outlook. The experiences of the 1997–1998 East Asian financial crisis that led to the creation of the Chiang Mai Initiative (CMI), the evolution of the Chiang Mai Initiative to become the CMIM, and the setting up of the ASEAN 3 Macroeconomic Research Office (AMRO) to support CMIM are reviewed. Proposals are made on how to make the liquidity support role of the CMIM more effective. These involve changing the International Monetary Fund link from that based on using more than a certain percentage of a country's CMIM quota to that based on the number of times the 90‐day CMIM swap needs to be rolled over, supplementing the size of the CMIM through linked bilateral swaps, allowing “contributing partners” beyond the current CMIM members, and developing the effectiveness of AMRO and its evolution into an East Asian monetary organization.