ASEAN+3 to Launch Funding Facility for Future Disasters
The ASEAN plus China, Japan, and South Korea (ASEAN+3) agreed to establish a financing program responding to emergency needs, the Rapid Financing Facility (RFF). During the ASEAN+3 Deputies Meeting in December 2023 in Japan, ASEAN Member Countries announced that the RFF is targeted to be endorsed by the ASEAN+3 finance ministers and central bank governors in May 2024.
The envisaged launch of RFF is prompted by the ASEAN+3 group’s effort to further enhance the regional financial architecture’s safety net. Anchored under the Chiang Mai Initiative Multilateralization (CMIM), this new facility will provide member nations with emergency funds – up to half of what is allowed under the CMIM – without conditionality, specifically when exogenous shocks such as natural disaster and pandemics occurs.
The CMIM, a regional currency swap agreement established in the aftermath of the 1997 Asian Financial Crisis to provide up to $240 billion in times of emergency, was not able to be mobilized even during the challenges posed by the Covid-19. Furthermore, ASEAN+3 group emphasized the crucial importance of speed in RFF implementation system and further agreed to simultaneously discuss ways to incorporate freely usable currencies for the RFF.