(China Daily)
Updated: 2008-05-06 07:15

Asian countries have taken a key step forward in furthering regional financial cooperation.

The agreement that finance ministers from the Association of Southeast Asian Nations (ASEAN) as well as China, Japan and Republic of Korea (ROK) reached on Sunday on a regional foreign reserve swap worth at least $80 billion is of great significance for both securing regional financial stability and delivering common prosperity in the long run.

Such a joint effort to shore up the region's defense against speculative attacks on local currencies is as needed today as it was a decade ago.

Of the total amount, Japan, China and the ROK would contribute 80 percent, while ASEAN countries would pay the rest. And it is expected that the swap can be operational as early as 2009.

The huge size of the foreign reserve swap bears full testimony to not only all these Asian countries' commitment to regional cooperation but also to their growing financial strength. Rapid economic growth in recent years has enabled most of these countries to accumulate a large sum of foreign exchange reserves.

A multilateral agreement to tap their reserves to enhance regional financial stability will considerably boost the people's confidence in the region's ability to pursue long-term and common development.

Had it come into being in the early 1990s, such a self-supporting agreement might have helped cushion these countries against the trauma of the 1997-98 Asian financial crisis.

In the aftermath of that crisis, these Asian countries have increasingly realized the necessity of enhancing regional cooperation on financial stability.

Fortunately, their common aspiration to prevent a recurrence of the Asian financial crisis has now begun to bear fruit at a crucial moment when the world economy is facing serious downturn risks amid the ongoing financial turmoil and surging oil and food prices.

Mutual support to enhance financial stability in this region is extremely important for Asian countries to maintain their growth momentum.

Meanwhile, the resilience of these Asian economies, a key driving force behind global growth, will also determine how the world economy fares in the face of a US recession and mounting inflationary pressures from food and energy.

(China Daily 05/06/2008 page8)