Inadequate Regional Financial Safety Nets Reflect Complacency

To the extent that financial contagion from the United States and the euro area crisis has occurred in Asia, this paper focuses on the importance of strengthening the regional financial safety nets. By conjecturing that efforts to prevent and manage a crisis are the essence of providing such safety nets, the author argues that efforts made by Association of Southeast Asian Nations (ASEAN)+3 officials, especially in the provision of liquidity support during a crisis, are far from adequate. Even with improved financial conditions and stronger regulations in ASEAN+3 member countries, contagion can and will strike. Making the Chiang Mai Initiative Multilateralization more effective is therefore urgent and critical.