China promotes currency swap with Japan, South Korea

Trung Quốc thúc đẩy hoán đổi tiền tệ với Nhật Bản, Hàn Quốc

According to the South China Morning Post, People's Bank of China Governor Phan Cong Thang discussed the initiative with his South Korean and Japanese counterparts on the sidelines of the IMF-WB Annual Meetings. China currently has 32 swap agreements worth a total of 4.5 trillion yuan, including agreements with South Korea, Japan, Europe and Iceland. Experts say the currency swap mechanism will help the three largest economies in Northeast Asia reduce their dependence on the US dollar and strengthen financial cooperation ahead of the upcoming ASEAN and APEC meetings.

Currency swaps are a tool commonly used between central banks to provide domestic currency liquidity, which can also provide financial relief in debt crises alongside relief operations by multilateral institutions.

The policy discussions come as China has long pushed to promote the offshore use of its currency, the yuan, to counter the dollar and push for a free trade agreement among the three East Asian nations, whose combined economies account for a quarter of the global economy.

South Korea and Japan are China's fourth and sixth largest trading partners by value in 2024. It remains unclear how a China-Japan-South Korea currency agreement might be formed and whether it would be included in the Chiang Mai Initiative, a multilateral currency swap arrangement launched in May 2000 that includes 10 Southeast Asian countries.

In an online statement last week, the People's Bank of China said the central bank governors of China, Japan and South Korea exchanged views on recent economic and financial developments. Another source said discussions on a currency swap were underway, but bilateral agreements between the three countries were the most likely outcome.

China's five-year currency swap agreement with South Korea, worth 400 billion yuan ($56.18 billion), expires this month. China signed a bilateral swap agreement with the Bank of Japan in October 2024, worth 200 billion yuan for three years. Meanwhile, the Korea-Japan currency swap agreement was revived in December 2023, worth 10 billion dollars and for three years.

Source: https://vtv.vn/trung-quoc-thuc-day-hoan-doi-tien-te-voi-nhat-ban-han-quoc-100251022213506768.htm