Dec. 29, 2009 (China Knowledge) - The People's Bank of China, the central bank, yesterday said that China, Japan, and South Korea have finalized plans for a US$120-billion regional foreign-exchange reserve pool designed to help Asian countries deal with a possible foreign capital flow shortage, sources reported.
China and Japan will each contribute US$38.4 billion, while South Korea will contribute US$19.2 billion. The total from the three nations will account for 80% of the US$120-billion reserve pool. The remaining 20% will come from the 10 members of the Association of Southeast Asian Nations.
The pool is being formed in accordance with the Chiang Mai Initiative, a multilateral currency swap arrangement among China, Japan, South Korea and ASEAN members.
Asian countries currently hold two thirds of the world's foreign exchange reserves, which total US$55 trillion. These countries have suffered a huge loss from the depreciation of the U.S. dollar during the global financial crisis.