Signing of the second Bilateral Swap Arrangement between Japan and Korea under the Chiang Mai Initiative
February 24, 2006
Ministry of Finance of Japan
Bank of Japan
Ministry of Finance and Economy of Korea
Bank of Korea
- The Bank of Japan, acting as the agent for the Minister of Finance of Japan, and the Bank of Korea (BOK), today, signed a second bilateral swap arrangement (BSA) under the Chiang Mai Initiative (CMI). The agreement will enable both countries to swap their local currencies (i.e., Korean won or Japanese yen) against US dollars.Under the agreement, Japan commits USD 10 billion while Korea commits USD 5 billion.
- This second BSA features a two-way nature, in which both Japan and Korea will provide US dollars through currency swaps upon request from each other, as opposed to the first one-way BSAs, in which only Korea could draw. This is an evidence of Japan and Korea's strong commitment to the regional financial cooperation in the context of Finance Ministries' and Central Banks' endeavor of the ASEAN+3.
- This second BSA also incorporates those measures such as an integration of ASEAN+3 economic surveillance, an increase in the size of swaps that could be withdrawn without the IMF-supported program (from 10% to 20%) along the lines with what the ASEAN+3 Finance Ministers agreed in Istanbul in May 2005. The new BSA is expected to contribute to the stability of regional financial markets in East Asia.
Note: The previous two "one-way" BSAs between Japan and Korea have been terminated.
- (1) BSA under the New Miyazawa Initiative up to USD 5 billion (concluded in June 1999).
- (2) BSA under the CMI up to USD 2 billion (concluded in July 2001).