ASEAN+3 launches rapid financing facility under CMIM for disaster, pandemic response

ASEAN+3 member countries will now be able to receive short-term emergency funds through the Chiang Mai Initiative Multilateralization (CMIM), the region's multilateral currency swap framework, without prior or post conditions when sudden external shocks such as natural disasters or pandemics occur.

Support will be capped at 50 percent of each member country's drawable limit, or 20 percent when not linked to an IMF program.

The Ministry of Economy and Finance and the Bank of Korea said Wednesday that an amendment to the CMIM agreement introducing the Rapid Financing Facility (RFF) takes effect Wednesday. All 27 member institutions completed the signing process on Nov. 4.

CMIM is a multilateral currency swap framework established by the 10 ASEAN nations and South Korea, China and Japan to jointly respond to liquidity crises. Under the arrangement, member countries provide their local currencies and receive US dollar support within pre-set limits when needed. The facility has a total size of $240 billion, with South Korea contributing 16 percent, or $38.4 billion.

The existing CMIM consists of crisis resolution and crisis prevention programs. To receive financial support, members must meet prior and post conditions, and any request exceeding 40 percent of the drawable limit requires that the country has adopted or plans to adopt an IMF program. The newly established RFF is a small-scale, short-term financing instrument designed to address temporary external shocks.

The decision to introduce the RFF was made at the ASEAN+3 Finance Ministers and Central Bank Governors' Meeting in May 2024, when South Korea served as co-chair. Member countries agreed on the need to strengthen the region's financial safety net. A draft amendment to the CMIM agreement was prepared in May last year, and member countries have since carried out the subsequent signing procedures.

The government expects the amendment to strengthen CMIM's short-term liquidity support function and crisis response capacity. South Korea plans to co-chair the ASEAN+3 Finance Ministers and Central Bank Governors' Meeting alongside Singapore next year, leading discussions on the effective operation of the RFF and broader regional financial cooperation.