The deal -- more than a year in the making -- will replace the existing arrangement of mainly bilateral currency swaps, called the Chiang Mai Initiative (CMI) and transform it into a more powerful self-managed reserve pooling mechanism governed by a legally binding single contract.
Vietnam's Finance Minister Vu Van Ninh, who co-chaired the ASEAN+3 meeting with Nukaga, said the agreement had been secured at a crucial time.
"There are outstanding risks to the global economy including the financial market turmoil and inflationary pressures from food and energy. To overcome these risks, mutual support in this region is extremely important," he told reporters.
The deal essentially gives to any of the signatory economies access to a foreign exchange reserves pool of at least $80 billion in the event of a financial emergency.
The talks, which took place on the sidelines of the Asian Development Bank's annual meeting in Madrid, saw Japan, China and South Korea agree to provide 80 percent of the total, ASEAN countries the balance.
Officials said loans will be made in U.S. dollars against local currency collateral provided by the borrowing nation, either via a currency swap or a promissory note.
Loans will cost between 150 and 300 basis points above the London Interbank Offered Rate (Libor) and be provided for three months, renewable for up to two years. Borrowing costs will be reviewed every five years.
Securing Financial Stability
Finance officials say the agreement will be a significant step forward for the 13 nations involved in the bilateral swap deals that were created in the wake of the 1997-98 Asian financial crisis, taking them closer to a full scale regional equivalent to the International Monetary Fund.
"This will play a role of supplementing existing international financial stability schemes," South Korea's Deputy Finance Minister Shin Je-yoon told reporters earlier in the day after a meeting of finance chiefs from Japan, China and South Korea. "This will show to the world that Asia is making a concerted push about securing financial stability."
The finance ministers said they were determined to work together to secure financial stability in Asia and would create a forum in which to discuss policies required to do so.
"We've decided to hold a gathering of finance ministers, financial supervising authorities and central banks from the three countries within this year because it is important (for) authorities who are responsible for macroeconomic policy and financial market stability to exchange views," Japan's Finance Minister.
Japan has been a leading advocate for the creation of a regional forum that brings together policymakers, supervisors and central bankers to promote financial stability, similar to the Financial Stability Forum backed by the Group of Seven industrialized nations.
Calls for an Asian monetary fund were made during the depths of the Asian financial crisis when IMF-led bailouts worth around $100 billion came attached with conditions for unpopular austerity programs and economic reforms.
But Naoyuki Shinohara, Japan's vice finance minister for international affairs, said ahead of the ADB meeting that any deal agreed would not be about creating easy money.
"We don't want it to be a mechanism to give out easy money," Shinohara said. "The most important issue is how to strengthen surveillance," he added.
Complicated factors remain to be negotiated, such as how to activate currency swaps while making sure borrowing countries would return the money after a crisis ends.
Japan's Nukaga said it would take a further year for the scheme's final framework to be agreed before the multilateral pool could be activated and accessed by its members.