China and Korea agree currency swap arrangement

by Richard Kilner

Story link: China and Korea agree currency swap arrangement

Following on from the recent agreement between the central banks of Japan, China and Korea to hold annual tripartite meetings, the People’s Bank of China and the Bank of Korea have announced they are establishing a bilateral currency swap arrangement.

The arrangement has been agreed upon to enhance bilateral trade between the two nations, and to improve short-term liquidity in the financial systems of both China and Korea.

The new agreement will operate in addition to the pre-existing Chiang Mai Initiative.

The currency swap agreement will support liquidity provision of sums up to 180 billion RMB/38 trillion KRW.

China and Korea have also agreed to consider the possibility of converting swap currencies into reserve currencies.

Initially the agreement will last for 3 years, and can be extended further should the two sides agree upon it.