Introduction

This paper discusses the Chiang Mai Initiative Multilateralization (CMIM)—its origin, development and outlook. Following the introduction, section 2 discusses the origin of the bilateral Chiang Mai Initiatives (CMI), the perceived need to develop regional self-help mechanisms arising from the 1997–98 financial crisis, and the emergence of the CMI. Section 3 discusses the development of the CMIM and agreements that have been reached thus far. Section 4 discusses the outlook for CMIM in two areas: the provision of liquidity support to countries in need of it, and the regional surveillance mechanism.

Proposals are made on how to make the liquidity support role of the CMIM more effective. It is also argued that the CMIM can bring about major changes to the policy institutional infrastructure of the East Asia region, particularly through the establishment of the so-called Independent Surveillance Unit (ISU). This new organization can provide technical and secretariat support for financial cooperation processes in the region, which currently lack such support. The paper also proposes consolidation of the main financial forums in the region. This could enhance the role of East Asia in the global financial arena and also facilitate policy cooperation, with important regional and global implications.

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