The Asian finance Yalta was signed by China, South Korea and Japan Thursday in Manila. Beijing, Seoul and Tokyo want to increase their investment in each others’ government bonds to 15,000 billion dollars.
Gathered on the sidelines of the Asian Development Bank (ADB) Governors’ 45th annual summit, which runs from May 2 to 5, these three countries have officially decided to increase their purchases of government bonds 15,000 billion dollars, the size they never reached in the past.
The objective is clear. Asian countries “want to protect their markets from external shocks,” said a statement, and distance themselves from the funds of International Monetary Fund (IMF), which had been mistreated during the 1997-1998 financial crisis.
Haruhiko Kuroda, ADB president, noted that these countries are facing long-term challenges while millions of people continue to struggle with less than $ 1.25 per day. And most of them are very dependent on their exports, they are now very concerned about the uncertainties in the euro area and inflationary pressures driven by rising oil prices.
$ 240 billion for Chiang Mai Initiative
This is also the reasons that China, Korea, Japan and the ten member countries of ASEAN (Association of the Southeast Asia) gathered in Manila announced the doubling of funds attributed to the program called the “Chiang Mai Initiative“, from $ 120 billion to $ 240 billion.
The agreement to exchange currency in the short term, signed in December 2009, is intended to provide financial assistance to all signatory countries if they lack liquidity.
The Asian Development Bank, who also used the summit in Manila to sign a Memorandum of Understanding for cooperation in research and innovation with Singapore, decided to set up a special fund dedicated to infrastructure in the region.
Domiciled in Malaysia, it should fund six projects a year for roads, railways, power plants or water, on the basis of a loan of $ 75 million for each of them.
The ADB believes that the infrastructure needs of Asia are at least $ 60 billion annually. They are among the top priorities of the bank, the progress is not enough to strengthen the resilience of the region to external macroeconomic shocks. It must also prepare to “achieve its objectives of long-term development.”