Tokyo should 'normalize' economic cooperation with Seoul
Korea and Japan are likely to begin talks to revive a bilateral currency swap deal suspended over diplomatic feuds.
"The Bank of Korea will try to reopen a currency swap deal with its Japanese counterpart and start the discussion soon," BOK Governor Lee Ju-yeol said.
Lee's remark, which came during a press conference on the sidelines of a regional forum in Manila Friday, reflected the Korean monetary authorities' intention to prepare for a possible capital outflow resulting from the U.S. interest rate hikes.
A currency swap is a tool for defending against financial turmoil by allowing a country beset by a liquidity crunch to borrow money from others with its currency.
Seoul and Tokyo signed their first currency swap deal in July 2001 beginning with $2 billion, and gradually expanded until it reached $70 billion in 2011. However, Japan refused to extend the deal that expired in 2015 after former President Lee Myung-bak visited the Dokdo islets.
Tokyo went further, suspending negotiations to revive the accord in January 2017 when Seoul let a statue symbolizing the victims of Japan's wartime sex slavery be installed in front of the Japanese Consulate in Busan.
"When Korea and China extended the bilateral currency swap arrangements, the controversy over the dispatch of a U.S. anti-missile battery in South Korea was underway, but the two countries ruled out any political discussions," Lee noted. "Our consistent stance is that we should approach a currency swap deal from the aspect of economic cooperation, and we will make efforts in that direction."
The BOK head is right to regard the currency deal from an entirely economic viewpoint separate from political and diplomatic concerns. It is also true, however, Lee's comment takes into account President Moon Jae-in's upcoming visit to Tokyo for a three-nation summit along with China, in the run-up to a historic summit between the U.S. and North Korea.
Tokyo would do well to revive the currency swap deal, if for no other reasons than helping to form a coordinated front in dealing with the North Korean nuclear issue.
Korea and Japan are likely to begin talks to revive a bilateral currency swap deal suspended over diplomatic feuds.
"The Bank of Korea will try to reopen a currency swap deal with its Japanese counterpart and start the discussion soon," BOK Governor Lee Ju-yeol said.
Lee's remark, which came during a press conference on the sidelines of a regional forum in Manila Friday, reflected the Korean monetary authorities' intention to prepare for a possible capital outflow resulting from the U.S. interest rate hikes.
A currency swap is a tool for defending against financial turmoil by allowing a country beset by a liquidity crunch to borrow money from others with its currency.
Seoul and Tokyo signed their first currency swap deal in July 2001 beginning with $2 billion, and gradually expanded until it reached $70 billion in 2011. However, Japan refused to extend the deal that expired in 2015 after former President Lee Myung-bak visited the Dokdo islets.
Tokyo went further, suspending negotiations to revive the accord in January 2017 when Seoul let a statue symbolizing the victims of Japan's wartime sex slavery be installed in front of the Japanese Consulate in Busan.
"When Korea and China extended the bilateral currency swap arrangements, the controversy over the dispatch of a U.S. anti-missile battery in South Korea was underway, but the two countries ruled out any political discussions," Lee noted. "Our consistent stance is that we should approach a currency swap deal from the aspect of economic cooperation, and we will make efforts in that direction."
The BOK head is right to regard the currency deal from an entirely economic viewpoint separate from political and diplomatic concerns. It is also true, however, Lee's comment takes into account President Moon Jae-in's upcoming visit to Tokyo for a three-nation summit along with China, in the run-up to a historic summit between the U.S. and North Korea.
Tokyo would do well to revive the currency swap deal, if for no other reasons than helping to form a coordinated front in dealing with the North Korean nuclear issue.
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