The so-called ASEAN+3, 10 member nations of the Association of Southeast Asian Nations (ASEAN) plus Japan, China and South Korea, agreed on Monday to seek a basic framework for a regional currency safety net at the group's heads-of-state meeting in late November.

The agreement was forged on the sidelines of the annual meetings of the International Monetary Fund and World Bank in Prague. The currency network is expected to be a cornerstone of a new initiative led by Japan to form closer regional monetary cooperation in case of currency crises in the future.

"We will submit a report to the ASEAN+3 heads on the Chiang Mai Initiative," said Ms Yoshitaka Murata, senior parliamentary vice finance minister, who attended the ASEAN+3 meeting.

The "ASEAN+3" heads of state will meet on November 24-25 in Singapore.In early May, the group agreed on the "Chiang Mai Initiative," incorporating two separate swap arrangements: one to expand the existing swap arrangements among the ASEAN nations, and another to set up a network of bilateral swaps between Japan, China and South Korea and ASEAN member nations.

ASEAN central bank officials in late August agreed to increase to $1 billion from $200 million a two-tier currency swap scheme supporting economies facing balance of payments problems. Finance officials are currently working on the framework for the new bilateral swap agreements, including rules for the duration of the swaps, interest rates and possible linkage with the programmes of the International Monetary Fund (IMF). Mr Murata said ASEAN has asked Japan to make the conditions on the bilateral arrangements flexible to reflect the various economies of the Asian region. "ASEAN nations asked for the arrangements to be easy to use," said Mr Murata. The group will also discuss whether to roll over the swaps arrangements and what kind of collateral would be used, the second MOF official said. An analyst at a major Japanese brokerage said the framework should be multilateral, not bilateral pacts, otherwise there was no merit for large holders of external reserves, such as Japan and China. It's just another formof give-away ODA," he said. He said Japan would also provide funds to the ASEAN office in Jakarta to help monitor capital flows, another aspect of the Chiang Mai Initiative. The funds, expected to be around 100 million yen, will come out of the technical assistance portion in the budget for the 2001 fiscal year.

There were no discussions about any connection with the Chiang Mai Initiative and the once-floated idea for an "Asian Monetary Fund," Mr Murata said.