Korean President Lee Myung-bak, right, shakes hands with Japan’s Prime Minister Yoshihiko Noda before meeting at the Blue House yesterday. [YONHAP]

Korea and Japan agreed to expand their currency swap arrangements to $70 billion, up from $13 billion, to protect both economies from global financial instability.

The decision was made during a summit between President Lee Myung-bak and Japan’s Prime Minster Yoshihiko Noda at the Blue House yesterday. The increase will be effective until the end of October 2012.

Currency swaps are short-term loan agreements between two countries in case a foreign currency crisis arises. If a country’s foreign reserves dwindle and a currency crisis ensues, as happened to Korea in the late 1990s, that country could borrow the currency of the other country while pledging its own currency as collateral.

Deputy Minister of Strategy and Finance Shin Jae-yoon told reporters yesterday the primary goal of the expanded currency swaps was to establish a safety net in preparation for a global crisis.

“Although the size of the currency swap is larger than what the market expected,” Shin said, “both sides agreed that the swaps needed to be sizable as a pre-emptive measure to stabilize the market.”

The government said that the swap arrangements were a significant move in enhancing cooperation between the two countries to head off a regional financial crisis.

According to the Bank of Korea, the two sides will increase the maximum amount of an existing bilateral won-yen swap arrangement from $3 billion to $30 billion. On top of that, the two countries have agreed to open a new $30 billion currency arrangement.

Since 2008, under the Chiang Mai Initiative, Korea and Japan have had one more currency swap arrangement of up to $10 billion.

Prior to the 2008 crisis, Korea had a $13 billion currency swap deal with Japan, which was expanded to $30 billion after the bankruptcy of Lehman Brothers affected Korea’s currency. The governments also expanded the $3 billion won-yen swap to $20 billion. That deal ended in April 2010 as the global economy stabilized and the Korean economy recovered.

The current $3 billion equivalent won-yen swap is set to expire on July 3, 2013. The expansion comes as fears of a financial crisis persist because of the euro zone debt problems.

Until early this month, the Korean currency was depreciating quickly and edged down to 1,200 won to the dollar as foreign investors dumped Korean assets in fear of contagion from the Greek sovereign debt crisis.

After Germany and France agreed to expand the euro zone emergency fund, the won appreciated and is currently trading at 1,131 won to the greenback.


By Lee Ho-jeong [ojlee82@joongang.co.kr]


한글 관련 기사 [중앙일보]

한·일 ‘마이너스 통장’ … 700억 달러로 늘린다

MB·노다, 통화스와프 합의

이명박 대통령과 노다 요시히코(野田佳彦) 일본 총리는 19일 양국 간 금융시장을 안정시키기 위해 현재 130억 달러 규모인 양국간 통화스와프(통화 맞교환)를 700억 달러로 늘리기로 합의했다. 원·엔 통화스와프는 마이너스 통장처럼 외환이 부족할 때 언제든지 이용할 수 있다. 이 대통령과 노다 총리는 청와대에서 단독·확대 정상회담을 연 뒤 이같이 밝혔다.

　이 대통령은 “세계 경제의 불확실성이 심화하는 가운데 금융시장을 선제적으로 안정시키기 위해 통화협력을 강화시켜 나가는 것이 중요하다는 인식 아래 한·일 통화스와프를 확대키로 했다”고 말했다. 이번 합의로 한국은행과 일본은행 간 원-엔 통화스와프(기존 30억 달러)가 300억 달러로 확대되며, 기존 치앙마이 이니셔티브(CMI) 통화스와프(100억 달러) 이외에 신규로 300억 달러 규모의 한은과 일본 재무성 간 달러-원/엔 통화스와프가 설정된다. 두 정상은 또 한·일 자유무역협정(FTA) 교섭을 조속히 재개하기 위해 실무협력을 강화하기로 했다.