TOKYO: Deputies of the ASEAN+3 group of nations agreed on Thursday to set up a new regional lending facility to respond to emergencies in the region amid rising uncertainty over a global economic slowdown and elevated US interest rates.

The ASEAN+3 grouping tags on Japan, China and South Korea to the Association of Southeast Asian Nations.

The establishment of the new scheme, dubbed the Rapid Financing Facility, and its specific content will be formally confirmed at their ministerial gatherings scheduled next spring and summer, Japanese top financial diplomat Masato Kanda said after the group’s two-day meeting in the city of Kanazawa, northwest of Tokyo.

The new facility was meant to complement the existing webs of multilateral currency swaps known as Chiang Mai Initiative Multilateralisation (CMIM) which can be used during times of crisis.

It will be placed under the umbrella of CMIM, the deputies said in a joint statement.

“CMIM was created by all of us for the sake of financial stability,” Kanda, vice finance minister for International Affairs, told reporters.

“To our regret, though, it was never mobilised even amid COVID-19.” “You never know when natural disasters or pandemics may occur. Member economies are craving for a facility that would meet the demand for balance of payments in such a situation.”

Japan is keen to realise a facility that enhances the use of existing currency swap lines, which should be more accessible, allowing members to tap funds in emergencies.

The ASEAN+3 group created the currency swap lines in 2000, following the Asian financial crisis of the late 1990s, and revamped it into a multilateral network in 2010 to help each other forestall or combat sharp capital outflows.

While Asian policymakers stress their countries have sufficient foreign reserves and buffers to fend off another crisis, they also see scope for improvements to arrangements.