The Thai bailout package exposed IMF underfunding and served as a model for the AMF
by demonstrating that pooling abundant Asian reserves could be an effective strategy in
dealing with financial crises. The AMF would also obviate tedious and time-consuming
consensus building in the future by automating commitments.
The US Treasury acted immediately after obtaining information on the AMF and
actively opposed it. According to Sakakibara, then Deputy Treasury Secretary Larry
Summers called him directly at his residence at midnight and angrily started, “I thought
you were my friend (2000, 185).” During a heated two-hour conversation, Summers
allegedly criticized the plan for excluding the United States and allowing for action
autonomous of the IMF. The US saw the enforcement of IMF conditionality as crucial to
resolving the Asian Crisis, and perceived the AMF as encouraging needless moral hazard
and duplication of IMF functions.
Whether or not the proposed AMF could have effectively functioned is an open
question. Japanese actions during the Asian Crisis, including the AMF, reflect frustration
with its inability to obtain desired outcomes with the IMF. As part of the New Miyazawa
Initiative, Japan took the unusual step of providing bilateral bailout lending to Malaysia,
crisis, Japan also initiated the Chiang-Mai Initiative, which would provide limited
amounts of rescue lending to Asian economies in crisis. However, the amount of
bilateral rescue lending Japan provided during the crisis independent of the IMF was
small, and the Chiang-Mai Initiative ties most of its lending to IMF conditionality. This
11
Ministry of Finance (Japan), The Council on Foreign Exchange and Other
Transactions, 2000, Appendix 2(7).
28
Convention