CMIM PEACETIME PREPARATION ASEAN3 FINANCE MINISTER AND CENTRAL

CMIM PEACETIME PREPARATION ASEAN+3 FINANCE MINISTER AND CENTRAL BANK DEPUTIES’ MEETING Cebu, 5 -6 April 2017

Deputies’ Direction At the AFCDM+3, Guiyang, December 2016, the Deputies: A B Endorsed the outcome of the CMIM Peacetime Preparation, and Instructed the TF, with the support of AMRO, to develop a new batch of items for the CMIM peacetime checklist exercise, while exerting its best effort to complete the opening of LCY accounts, and report the progress at the next AFCDM+3 in April 2017. Outcomes of TF meeting in Tokyo (January) and Manila (March): Ø Update the current peacetime checklist Ø Propose the new batch of peacetime checklist: Item 1: Establishment of a swap transaction mechanism in cooperation with FRBNY, and Item 2: Conduct of Internal Test Run among authorities in each ASEAN+3 member. 2

A Updates on the Current Peacetime Checklist

Outcome of the Current CMIM Peacetime Preparation Checklist 1. Opening of the Local Currency Account (CMIM Art. 7. 3. 7) Outcome Mostly (165 out of 182) 2. Usability of the General Account of Fed. New York (CMIM Art. 7. 3. 7) Fully confirmed 3. Teleconference or video-conference facilities (CMIM Sch. 2) Fully confirmed 4. SWIFT Account (CMIM Art. 7. 4. 1, Sch. 9) Fully confirmed 5. Common Covenants a. Exchange of the Commitment Letter (CMIM Art. 3. 2, 7. 1, Sch. 3) b. Representation and warranties (CMIM Art. 9) c. Submission of the Periodic Report for the ERPD (11. 1) d. Participation at the ERPD meeting (CMIM Art. 11. 2) Fully confirmed 6. No Domestic Legal Limitation as to USD provision (CMIM Art. 8. 2 (d)) Fully confirmed 7. Confirmation of Legal Clearance of Template Letters (CMIM 10. 1. 1, 10. 1. 2, 10. 1. 3) Fully confirmed 8. Verification of No Imposition of any Controls of Capital Outflows concerning CMIM (CMIM Art. 10. 1. 7) Fully confirmed 4

B The New Batch of Peacetime Checklist

Item 1: CMIM Swap Transaction Mechanism Objective • To provide a common understanding among CMIM Parties and the FRBNY: Ø Facilitate a smooth swap transaction process once CMIM facility is activated Ø Support a few central banks which have yet to have regular transactions with the FRBNY Deliverables ü Operational guidelines on CMIM swap transaction mechanism ü Template documents (e. g. SWIFT messages template) for the swap transaction 6

Item 1: CMIM Swap Transaction Mechanism (cont. ) TF Discussion • Basic Structure of OG on swap transaction mechanism: Ø Procedures of drawing for CMIM-PL and CMIM-SF, and settlement at maturity (see Attachment 2 – Procedures of CMIM Swap Transaction) Ø SWIFT message templates • March Survey on peacetime checklist, the TF: Ø Proposed prioritizing of communication modes: SWIFT messaging as default mode, if unavailable, email and then fax in order Ø Updated the Schedule 4 and 9 of CMIM Agreement to reflect current situation Ø Proposed to include the Schedule 4 and 9 as part of regular peacetime updates • Other issue: whether to proceed with coordinating the swap transaction mechanism with the FRBNY 7

Item 2: Conduct of Internal Test Run Objective Ø To identify all relevant internal units of each authority and define their respective roles in the activation of CMIM arrangement, both as requesting and providing party. Ø To enhance awareness among relevant internal units within individual member country on their respective roles and the timelines of CMIM activation procedures Deliverables ü Individual country’s internal manual on CMIM Activation, both as requesting or providing party, involving all relevant internal units ü Conduct of internal test run by each country members are encouraged to have their internal test run along with the 8 th CMIM test run ü Checklist of the establishment of internal procedure and the conduct of internal test run by each member will be reported to the Deputies 8

For Deputies’ Endorsement and Instructions The TF members would like to seek Deputies’ : 1 Endorsement on the outcome of the CMIM Peacetime Preparation 2 Endorsement on the proposed new batch of peacetime preparation checklist as well as the proposed deliverables: (1) establishment of a swap transaction mechanism in cooperation with the FRBNY, and (2) conduct of Internal Test Run 3 Instruction to proceed with coordinating the swap transaction mechanism with the FRBNY 9

Thank you

12 Attachment 1 - Opening of the Local Currency Account (165 out of 182) as of 03/24/2017 The host central banks that open the LCY accounts for the customer central banks. AMBD NBC Customer central banks. AMBD O PBOC HK BI BOJ 1 BOK BOL BNM CBM BSP MAS BOT SBV Δ O O O Δ O O O O O Δ Δ O O O O O O O O O O Δ O O O Δ O O O / NBC O PBOC Δ O HKMA O O O BI O Δ O O BOJ O O O BOK O O O BOL O O O O BNM O O O O CBM Δ O Δ O BSP O O O O O MAS O O O BOT O O O SBV O O O O O Δ O O O 10 13 13 12 13 8 12 13 13 Total 2/ 11 12 11 13 : 165 O: Account Opened, Δ : under discussion, ( O ) the possible date for deadline 1/ BOJ is able to open the CMIM JPY accounts whenever the necessity is identified. For now, 9 JPY accounts, which are utilized for FX reserve investment in JPY denominated assets and can be utilized as CMIM JPY accounts by modifying T/Cs, are already opened for respective member economies. . 2/ Total sum of the number of LCY accounts that have been opened. 11

Attachment 2 – Procedures of CMIM Swap Transaction A. Outline of CMIM Activation Process 12

Attachment 2 – Procedures of CMIM Swap Transaction (Cont. ) B. CMIM-SF Drawing Process 13

Attachment 2 – Procedures of CMIM Swap Transaction (Cont. ) C. CMIM-PL Swap Line Activation and Drawing Process 14

Attachment 2 – Procedures of CMIM Swap Transaction (Cont. ) D. Repurchase of Drawing Mechanism 15