TOKYO: Japan and South Korea on Thursday agreed to revive their currency swap arrangement in an effort to enhance the region’s financial safety net, a step designed to strengthen economic and financial cooperation between the two countries amid improved relations.

The arrangement allows Japan and South Korea to provide each other with foreign currencies during a financial crisis. The two countries launched a currency swap arrangement in 2001, but the pact expired in 2015 amid a series of disputes between them mainly over history issues.

The two countries concluded that reviving the arrangement would be a strong symbol of bilateral financial cooperation, though there is no urgent need for such a system.

Tokyo and Seoul agreed to revive the arrangement for 10 billion dollars at a meeting in Tokyo between Japanese Finance Minister Shunichi Suzuki and Choo Kyung-ho, South Korean deputy prime minister and minister of economy and finance, the first cabinet-level financial dialogue between the two countries since August 2016.

At a press conference after the dialogue, Suzuki said, “Strengthening bilateral efforts is needed” to prepare for a possible crisis, while noting that the currency swap arrangement will not be utilized for the time being.

Japan and South Korea also agreed to work together in infrastructure development in the Indo-Pacific region.

The Japan Bank for International Cooperation and the Export-Import Bank of Korea, both government-backed lenders, signed a memorandum of understanding on cooperation in infrastructure financing.

The two countries also agreed to cooperate in a Group of Seven-led initiative to strengthen supply chains for products indispensable to carbon reductions.

Suzuki and Choo said in a joint statement after the dialogue that they “acknowledged heightened uncertainty about the global and regional economic outlook and shared the importance of remaining vigilant and staying agile in policy actions to support regional economic growth and maintain financial stability.”

The ministers also said they are “united in their condemnation of Russia’s war of aggression against Ukraine.” The war has “exacerbated global economic challenges, including through adding to inflationary pressures, disrupting supply chains, and heightening energy and food insecurity,” they said.

JIJI Press