The Japanese finance ministry said Monday it will consider steps to further encourage direct yen-yuan trading and settlement of bilateral trade in the two currencies-highlighting Tokyo’s continued enthusiasm for reinforcing financial ties with China.
Documents released by the ministry on progress toward a financial deal agreed late last year by Asia’s two largest economies also signaled that Japan’s central bank may urge its Chinese counterpart to expand their yen-yuan swap line, currently valued at around $3 billion.
Japan will “consider measures to promote further growth in the market for direct yen-yuan trading,” the finance ministry said in the documents, which summarise progress in the two nations’ efforts to strengthen financial cooperation, as well as Japan’s future plans.
In addition, the ministry will mull steps to encourage settlement of trade and investment between China and Japan in yen and yuan, according to the documents.
Also on the to-do list are growing the bond markets of both nations, promoting the expansion of business operations by Chinese and Japanese financial institutions in both nations, spurring the creation of yen- and yuan-denominated financial services, and “reviewing” a yen-yuan swap between the Chinese and Japanese central banks.
The documents contained little detail on how Japan plans to make these things happen. A finance ministry official told a press briefing the planned review of the current swap deal are up to the BOJ and the PBOC.
But the official noted that recent swap agreements between China and other nations are “relatively large”-suggesting Japan wants to enlarge its swap deal rather than merely extending it at the present size.
The swap line was established in 2002 and is set to expire around the middle of the next year.