Tokyo, Seoul to push currency safety net
13-OCT-2008 Intellasia | Kyodo
Oct 13, 2008 - 7:09:00 AM
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| An employee counts U.S. dollars at the Bank of Tokyo-Mitsubishi UFJ money exchange in Tokyo October 10, 2008. The dollar hit a six-month low of 97.91 yen on trading platform EBS before clawing back to 99.40 yen down 0.5 percent on the day. (Reuters %u2013 daylife.com) |
Japan Finance Minister Shoichi Nakagawa and his South Korean counterpart Kang Man Soo agreed Saturday to push for efforts to launch a multilateral currency swap program for Asia, a Japanese official said.
They reached the accord when they met for 30 minutes on the sidelines of a series of financial meetings in Washington under the aegis of the International Monetary Fund and the World Bank.
Thirteen East Asian nations have been seeking to evolve an existing network of currency swaps under the Chiang Mai Initiative, a safety net to help fight speculative attacks on their currencies, into one to be operated multilaterally, rather than bilaterally.
This "multilateralization" of the initiative would hopefully prevent any future financial crisis in one country from spreading through the region, such as the one that hit Asia in 1997 and 1998.
Asked about the possibility of Japan supporting South Korea with a bilateral swap deal under the Chiang Mai Initiative in the near future, the Japanese official said he does not expect that to happen in view of Seoul's still ample foreign reserves holdings.
South Korea is facing its biggest capital flight since the Asian crisis, with the won plummeting to 10-year lows on the country's worsening international balance of payments.
During the meeting with Nakagawa, Kang was quoted as saying South Korea's economy is basically sound but adding that the current global financial turmoil will affect the country going forward.
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| A man looks at a video display showing Japanese stock prices in Tokyo October 8, 2008. (Reuters %u2013 daylife.com) |
Finance ministers from the ASEAN-plus-three countries agreed in May they will make a multilateral currency swap deal worth $80 billion, with the proportion of the contribution between the ASEAN and the three other nations to the scheme being "20 versus 80."
The ASEAN-plus-three framework brings together the 10 members of the Association of Southeast Asian Nations plus Japan, South Korea and China.
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