Premier calls for better use of regional foreign exchange pool

Premier Li Keqiang attends a summit with leaders from ASEAN, China, Japan and South Korea in Bandar Seri Begawan, Brunei, on Thursday. Philippe Lopez / Agence France-Presse

Premier Li Keqiang called on Southeast and East Asia to improve the regional financial firewall on Thursday by better using a regional foreign exchange fund, among other measures.

A multilayer regional financial safety net should be improved to help withstand global market volatility, Li said at a summit that brought together leaders from the Association of Southeast Asian Nations plus China, Japan and South Korea, in Bandar Seri Begawan, Brunei.

Analysts said Li's call comes as Asian markets have recently been hit hard by the US plan to pull back from a liquidity-boosting program, a decision that Washington later said it would reconsider.

Li said measures to strengthen regional financial cooperation can include boosting domestic foreign exchange reserves, expanding the regional foreign exchange pool and improving bilateral currency swap mechanisms.

Li pledged to "improve and work out the details of operating procedures for the $240 billion foreign exchange pool and explore the possibility of improving the use of local currencies" under the framework of a currency swap arrangement known as the Chiang Mai Initiative Multilateralization.

These measures can help maintain financial stability and enhance economic efficiency, a former official said.