The news that ASEAN+3 has agreed to set up an Asian Monetary Fund to help member countries overcome financial crises is, undoubtedly, one of the most significant economic and political developments of the century.

History was made on May 4, 2008, when the finance ministers of the 10-member ASEAN (Association of Southeast Asian Nations) and their counterparts from Japan, China and South Korea came together, on the sidelines of the 41^st annual meeting of the board of governors of Asian Development Bank (ADB) in Madrid, Spain, to set up a fund worth $80 bn, with the intention of offering emergency financial assistance to member states to deal with any financial crisis in the future.

Coming, as it does, exactly a year after these countries agreed in principle in Kyoto, Japan, in May last year, to launch a multilateral currency-swap scheme to weather any future liquidity crisis, the Asian Monetary Fund (AMF)—as it is popularly referred to—is all set to become an Asian version of the International Monetary Fund (IMF). Ironically, the origin of the AMF can be traced to the IMF's high-handed response to the financial crisis that rocked some of the Southeast Asian nations in 1997-98.

Exactly 10 years ago, a few members of ASEAN—Thailand, Indonesia, Malaysia and South Korea—found themselves in a hapless predicament, following one of the worst crises to have ever hit their economies. The financial tsunami, which originated in Thailand on July 2, 1997, ran amok across the Thai economy, as the Thai baht collapsed by about 25% after scaling peaks during the previous 10 years, having traded at about 25 to a dollar.

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