The pool – 50 per cent bigger than one outlined in May last year – is still small. Japan, China, Korea and the 10 Asean countries have more than $3,600bn in reserve assets; China on its own could fund the whole thing 16 times over. More important, however, is the statement of intent. Bilateral is becoming multilateral. Concerted action, in theory at least, provides a backstop to the kind of speculative attacks on currencies that rinsed away the reserves of Indonesia, Thailand and Korea a decade ago. Should the export slump continue, participants might be less inclined to engage in competitive devaluation.
But while a new currency framework may absorb the impact of sudden withdrawals of capital from local markets, it will not stop the steady erosion: Asian equity fund outflows resumed last week, according to EPFR, continuing the theme of 2008. And for all the fine-sounding rhetoric in Phuket and in Chiang Mai in 2000, Asian co-operation is patchy in practice. Late last year the US Federal Reserve did more to calm regional markets with its swap lines – $30bn each to Singapore and Korea – than the Chiang Mai signatories, which together mustered a $12bn line to Indonesia. Members are already bickering over how to distribute contributions; no timetable has been set for the launch of the pool.