inq7.net, May 27, 2005
The Bank of Japan said Friday it has concluded a bilateral yen-won swap arrangement with the Bank of Korea, effective immediately, in a move to avoid another regional financial crisis.
The maximum amount of the currency swap arrangement is the equivalent of three billion dollars in yen and won, the central bank said.
"This agreement is in line with the framework of the Chiang Mai Initiative in pursuit of stabilizing regional financial markets through supplying short-term liquidity," it said in a statement.
Five years ago, finance ministers from the Association of Southeast Asian Nations plus Japan, South Korea and China agreed in Chiang Mai, Thailand to establish the first regional financing arrangement.
A lack of liquidity in short-term funds caused the last Asian financial crisis when it triggered large-scale selling of regional currencies and dampened economic growth from 1997 to 1998.
The Asian nations are also coordinating to develop bond markets using local currencies to finance corporate needs without too much dependence on the US currency.
Interesting. Perhaps as the markets in Asia get closer relations in general will also improve. It'd be nice, even if it's still a pipe dream.
