India has confirmed that it will invest $1 billion in the Asia Bond Fund, according to an official from the Kingdom of Thailand.
The official is part of the 100-member delegation that is visiting India. The team is headed by Korn Dabbanrransi, deputy prime minister, Kingdom of Thailand.
Speaking to media persons on the sidelines of the CII Round Table on Information Technology in Bangalore on Friday, the official said Prime Minister Atal Behari Vajpayee and the foreign ministry had confirmed India's contribution to this fund.
The ABF was set up in June by 11 Asia-Pacific central banks. These banks pooled $1 billion of foreign exchange reserves and handed it to the Bank for International Settlements to invest in dollar debt issued by their governments.
While the fund is aimed at developing a regional market for bonds and adding to financial stability in the Asia Pacific region, the second phase of this initiative is intended to move into local currency bonds.
Recently, Thailand Prime Minister Thaksin Shinawatra announced the launch of an Asia Bond Fund backed by 11 Asia-Pacific countries -- Japan, China, Australia, Thailand, the Philippines, Malaysia, Indonesia, Singapore, Hong Kong, South Korea and New Zealand. Other participating countries are expected to make separate announcements about joining the fund.
The International Monetary Fund has said it will consider investing in the Asia bonds, which can count as part of a participating country's foreign reserves.
The ABF initiative is expected to be formally launched with political fanfare at a summit in Bali in October. This coincides with Prime Minister Vajpayee's visit to Thailand, where he would be signing the free trade agreement.
Meanwhile, Dabbanrransi, during the third leg of his visit to Bangalore, emphasised on Thailand's "Look West" policy, which attaches importance to the development of relations with countries in the Indian subcontinent. Dabbanrransi also signed two key memoranda of understanding with corporates in Bangalore.