Korea, Japan, China and 10 Southeast Asian countries on Wednesday agreed to double their reserve pool to $240 billion to better absorb shocks against possible crisis from Europe, the Kyodo news service reported.

Deputies of finance ministries at members of the Association of Southeast Asian Nations Plus Three have agreed to double their currency swap deal, known as the Chiang Mai Initiative, at their meeting in Cambodia, Kyodo reported.

The deal, designed to buffer the region from external shocks, allows member countries to reduce their foreign exchange reserves. It works as a safety net should members experience liquidity shortages from fast outflow of capital. The ASEAN Plus Three up to now had 20 percent of the $120 billion to tap without linkage to loans by the International Monetary Fund.

Several news reports said the ASEAN Plus Three are expected to raise the portion of available fund independent of IMF in the coming months to prevent possible shocks from the European debt crisis.

Seoul officials at the Finance Ministry weren’t immediately available for comments. Rapid inflow of capital has been a shared concern among emerging markets as Europe and the U.S. have been keeping ultra loose monetary policies.

The proposed increase in CMI fund will be a fraction of the reserves held by Asian nations, holder of more than half of global reserves. China has accumulated more than $6.5 trillion won of reserves, followed by Japan who has about $1.2 trillion won. Korea’s the world’s seventh-largest holder of foreign exchange reserves, has more than $315 billion set aside for crisis prevention.

By Cynthia J. Kim (cynthiak@heraldcorp.com)