The contemplation by Asian finance leaders to add the Chinese and Japanese currencies to a regional foreign reserves buffer fund is the latest sign that the trade war is causing countries to slowly move away from dependence on the US dollar.
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The 10 members of the Association of Southeast Asian Nations plus China, Japan, and South Korea, together known as “Asean+3”, were reported earlier this month to be considering including the yuan and the yen to their Chiang Mai Initiative Multilateralisation (CMIM) scheme, a framework for multicurrency swap arrangements.
The US$240 billion CMIM scheme was established in response to the 1997 Asian financial crisis to serve as a safety net that provides US dollar support to any one of the countries in the event of a liquidity crisis.
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The Asean members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
The review of the CMIM scheme to add additional regional currencies into the fund, amid the escalating US-China trade war, underscores not only growing efforts in Asia to bolster intraregional financial linkages, but also the regional countries’ intent to reduce reliance on the US dollar-based financial system.
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