The Asian countries, mainly the South East Asian nations, have geared up to chip in $80 billion of capital to set up Asian Monetary Fund- the Asian version of the IMF, which obviously would be unhappy because of potential influential/power loss. The countries want to get rid of harsh conditionalities and economic reform packages the IMF imposes on them if they borrow money at times of financial crisis. South Korea was subjected to such restructuring reforms, which were hugely unpopular, after it borrowed $40 billion from the IMF to bail itself out of the 1997-98 financial crisis. The Latin American countries have also formed similar alliance to get rid of the IMF's grip on their economy and its conditionality, which it imposes if countries want to borrow loans at times of financial crisis. Is the relevance of the IMF further diminishing?
At the 41st annual meeting of the Asian Development Bank(ADB)'s board of governors here, finance ministers of the 10 Southeast Asian countries plus South Korea, China and Japan endorsed an agreement by working-level officials to raise a minimum capital of $80 billion to create the fund and advance their previous currency swap accords.
The countries agreed on the minimum amount of the capital and the interest rates that will be charged on the bailout funds. Seoul, Beijing and Tokyo have offered to contribute 80 percent of the seed money to become major shareholders of the fund and other nations are not opposed to it, according to South Korean officials. This means, if the fund has $80 billion in capital, Seoul, Beijing and Tokyo will share $64 billion.
Under the Chiang Mai Initiative adopted in 2000, the ASEAN+3 nations agreed to set up the so-called Asian Monetary Fund to prevent a recurrence of a financial crisis in the Asian region. The system is aimed at helping crisis-hit countries use a common pool of currency reserves to overcome a financial disaster.