3  honor previous pledge will be reduced. Therefore, to make the CMIM effective, it is critical to transform it into a fund with paid-in capital and develop a proper institutional design so that its paid-in capital can be always regarded as a part of FX reserves. Prolonging the Maturity Second, we need to extend the maturity of the CMIM programs.
Although the CMIM’s original purpose is to respond to a liquidity problem, in many cases, illiquidity can easily develop into solvency problems, which require more time to resolve. Also, the short period of financing assurances reduces the incentive for member countries to turn to the CMIM. Recently, the CMIM has adjusted the maturity of their financial assurances and improved compatibility with IMF programs.