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CHANGES to the Chiang Mai Initiative Multilateralization Agreement (CMIM) went into effect on Wednesday, allowing members to use their local currencies to support the liquidity of swap agreements should the need arise.
The Bangko Sentral ng Pilipinas (BSP) said in a statement Wednesday that the revised CMIM agreement will institutionalize the use of local currencies by members, in addition to the dollar, for financing on a voluntary and demand-driven basis.
The facility, which opened in 2010, is intended to serve its members in times of short-term crisis. The deal includes finance ministers and central bank governors from the Association of Southeast Asian Nations (ASEAN), China, Japan and Korea, as well as the Hong Kong Monetary Authority.
The revisions to the pact will also raise the untied portion of the International Monetary Fund (IMF) from 30% to 40%. This means that members can get up to 40% of their maximum loan amount without being subject to IMF credit conditions.
Members of the CMIM agreement also agreed to address technical issues, including revisions related to the London interbank offer rate. The international benchmark interest rate used by global banks for short-term international interbank loans will be phased out by June 30, 2023 and replaced by an overnight guaranteed financing rate.
The Philippines’ contribution to CMIM through the BSP is $ 9.104 billion. Under the deal, the country can borrow up to 2.5 times its commitment or about $ 22.76 billion. – LWTN
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