Japan and South Korea agreed on Thursday to revive a $10-billion currency swap deal, building on improving two-way ties to strengthen a regional financial safety net amid increased geopolitical risks.
The swap deal was first agreed in 2001 as a tool to help the two countries combat a financial crisis, but it was never used and was allowed to expire in 2015 amid diplomatic tension.
“There’s increased need to strengthen bilateral ties as global and regional economies face major uncertainty and risks,” Masato Kanda, Japan’s vice finance minister for international affairs, told reporters.
The currency swap deal was part of the two countries’ ambition to promote co-operation, he added.
At its peak in 2011, the deal was worth $70 billion.
The revived deal was struck between Japanese Finance Minister Shunichi Suzuki and his South Korean counterpart Choo Kyung-ho at a meeting in Tokyo, in the first dialogue between the two nations’ finance ministers in seven years.
The swap line is not intended for any immediate use, but is meaningful to solidify financial co-operation networks, Choo told reporters after the meeting, a media pool report said.
“The swap line expands the sources for dollar liquidity,” Choo said.
Later, South Korea’s presidential office said the deal was symbolic of improving relations, and was expected to have positive effects on financial and foreign exchange markets.
The ministers also discussed the global economy, infrastructure investment and debt problems in developing countries, and broader financial co-operation.
Seoul will host the next round of finance talks in 2024.