The ASEAN+3 meeting reached an agreement to strengthen the financial safety net in response to Middle Eastern instability.

South Korea, Japan, China, and the 10 ASEAN countries have reached a consensus on strengthening regional cooperation to stabilize supply chains and ensure energy security amid the backdrop of regional instability in the Middle East, which has led to slowed economic growth and increased inflationary pressures.

According to the Bank of Korea (central bank), during the 29th ASEAN+3 Finance Ministers and Central Bank Governors Meeting held in Samarkand, Uzbekistan on the 3rd local time, all member countries unanimously agreed that recent Middle Eastern developments pose greater downside risks to the Asian economy. The meeting particularly identified rising energy prices, tightening global financial conditions, and increased volatility of capital flows as key risk factors. Based on this, countries decided to respond with policies suited to their own economic conditions to maintain macroeconomic and financial market stability, and to continue supporting an open, rules-based multilateral trading system.

The joint statement also included warnings about financial market instability. Member countries believe that excessive market volatility, disorderly movements, and changes in global liquidity could evolve into new shocks, and they stated that they would monitor these developments closely. This is not just a matter of exchange rates or interest rates, but a response to the possibility that, as external shocks intensify, capital inflows and outflows centered on emerging markets could change sharply. As recent events have shown, the greater the geopolitical risks, the more likely it is that Asian countries with heavy energy import burdens will experience simultaneous impacts on prices, exchange rates, and growth rates.

The meeting also discussed plans to enhance the effectiveness of the regional financial safety net—the Chiang Mai Initiative Multilateralization (CMIM) system—as a key agenda. Member countries approved a roadmap to transform the fund’s capital raising method from a standby arrangement to a paid-in capital structure. The paid-in capital model involves members pre-paying capital in advance, rather than raising funds temporarily during crises, aiming to improve crisis response speed and credibility. The countries reached an agreement on three of the four core principles required for establishing a new legal entity and decided to finalize the remaining governance principles as soon as possible. The meeting also indicated that discussions with the International Monetary Fund (IMF) regarding the scheme where paid-in capital is regarded as foreign exchange reserves have made significant progress.

Yoo Sang-dae, Vice President of the Bank of Korea, stated that the Middle Eastern situation underscores the importance of regional safety nets and pointed out that shifting to a paid-in capital model will enhance the reliability, availability, and responsiveness of the financial safety net. The meeting also expanded the scope of regional capital market cooperation. It was decided to extend and reorganize the existing Asian Bond Market Initiative into the Asian Bond and Financial Market Development Initiative, covering stocks and derivatives as well. For the first time, a high-level meeting of central banks was held to discuss plans to strengthen cross-border settlement connectivity. The meeting was attended by finance ministers and central bank governors from Korea, Japan, China, and the 10 ASEAN countries, as well as the President of the Asian Development Bank, the IMF Deputy Managing Director, and the head of the ASEAN+3 Macroeconomic Research Office. Next year’s ASEAN+3 meeting will be co-hosted by South Korea and Singapore and held in Nagoya, Japan. This trend indicates that, amid ongoing global uncertainties, Asian countries may increasingly view supply chains, energy, and financial safety nets as an integrated whole, and are moving toward further enhancing cooperation levels.