Currency Swap Agreements as Instruments of Regional Financial Governance: Evidence from Southeast Asia

Abstract

This study examines the role of currency swap agreements as instruments of regional financial governance in Southeast Asia, focusing on how these arrangements strengthen liquidity support, promote monetary cooperation, and reduce reliance on external financial institutions. By analysing bilateral and multilateral swap mechanisms, particularly within ASEAN+3 frameworks, the research highlights their contribution to enhancing regional resilience and economic stability in an increasingly volatile global financial environment. The urgency of this issue lies in the recurring external shocks and global uncertainties that expose the vulnerabilities of Southeast Asian economies, underscoring the need for robust regional mechanisms that ensure financial self-reliance. While the study provides valuable insights into the institutional design, governance frameworks, and policy implications of swap agreements, it does not assess their operational efficiency in detail or offer quantitative modelling of exchange rate stability. The key questions guiding this research include how currency swaps contribute to regional financial governance and what geopolitical and economic implications arise from expanding such agreements within Southeast Asia. Using a qualitative and comparative approach, the study draws on policy analysis, institutional reports, and scholarly literature to evaluate the evolution and impact of key swap initiatives. The findings suggest that currency swaps serve as pivotal instruments for enhancing Southeast Asia’s financial resilience, but their success ultimately depends on strong governance, effective policy coordination, and sustained political commitment from member states. The study concludes by suggesting that future research should focus on quantifying the impact of swap agreements on currency volatility, exploring the integration of digital financial frameworks, and examining ASEAN’s evolving role within broader global financial governance networks.