BEIJING – Southeast Asian countries, together with Japan, South Korea and China, should hasten the creation of a buffer fund to help economies in the region hit hard by the global financial crisis, Indonesia President Susilo Bambang Yudhoyono said Thursday (October 23).

Yudhoyono said regional leaders should consider revisiting the Chiang Mai Initiative, established after the 1997 financial crisis, to put up a standby facility that will help countries fight speculative attacks on their currencies.

"It is imperative that we hasten this mechanism," Yudhoyono said, speaking before business leaders attending the 11th Asia-Europe Business Forum (AEBF) ahead of the 7th Asia-Europe Meeting (ASEM) on October 24-25.

Yudhoyono’s call echoed the recommendation of AEBF’s working group on financial security that called for the establishment of an "emergency funding mechanism" for countries that are facing systemic risk to their financial systems.

"Asia must also ensure that trade and investment flows continue as the region will be an important source of growth during the expected slowdown in the global economy," Yudhoyono said.

Yudhoyono, who met with Chinese President Hu Jintao earlier in the day, said Indonesia is willing to work with China and other countries in implementing a swap arrangement fund to enable economies in the region to help one another during the turmoil.

However, the Chiang Mai Initiative has so far been implemented only at a bilateral level. Dr Masahiro Kawai, dean of the Asian Development Bank Institute, said Asean + 3 may have to consider "multilateralizing" it to allow greater currency exchange.Kawai cited Singapore’s "band-basket-crawl" policy that allows its monetary authority to manage the Singapore dollar against an undisclosed basket of currencies since 1981. This allows the Singapore dollar to vary within an undisclosed "band" as a means of ensuring greater exchange rate flexibility in the face of external shocks and other uncertainties.

"It is a technical discussion but it is time for Asian economies to get together and reevaluate the Chiang Mai Initiative so that if something happens, there is a standby facility," Kawai said.

The financial crisis and the concerted response from Asia and Europe is on the table at the 7th ASEM meeting to be attended by leaders from 45 countries.

Thailand deputy prime minister Olarn Chaipravat was quoted in an earlier report that Thailand plans to propose the expansion to at least US$150 billion a short-term liquidity support scheme.

East Asian finance ministers have agreed previously to create an $80 billion currency swap to replace existing arrangements under the Chiang Mai Initiative.

The other recommendations from AEBF on financial security include urging governments to use fiscal and monetary policies in spurring domestic economies.

Business leaders also believe that there is no more need for additional regulations, but a better and more comprehensive regulatory framework that are evenly implemented across economies.