BOK not reviewing currency swap with US Treasury: governor
Bank of Korea Gov. Rhee Chang-yong speaks during a parliamentary audit of the central bank in Seoul, Monday. Yonhap
Korea's central bank has not discussed a currency swap with the U.S. Treasury Department as a breakthrough for the prolonged tariff talks with Washington, Bank of Korea (BOK) Gov. Rhee Chang-yong said Monday.
Rhee made the remarks during a parliamentary audit in Seoul, responding to suggestions that a currency swap could help finalize the tariff deal, including how to fund Korea's $350 billion investment commitment.
"The BOK has not considered a currency swap with the U.S. Treasury," Rhee said. "It seems there are references to cases like Argentina, but currency swaps between central banks are intended for short-term liquidity purposes, not for long-term purposes."
Rhee added that whether a direct swap between the BOK and the U.S. Treasury Department is even legally possible needs to be examined, and any swap with the U.S. Treasury's Exchange Stabilization Fund would require the Korean government to act as the counter party, not the BOK.
In July, Korea and the United States reached a framework deal in which Washington would impose a 15 percent tariff on Korean goods, rather than the initially threatened 25 percent, while Seoul would create a $350 billion fund for U.S. investments.
But no formal agreement has yet been finalized and negotiations for details have been under way.
The Seoul government has proposed a foreign exchange swap line with the U.S., with President Lee Jae Myung warning that the Korean economy could face a crisis comparable to the 1997 financial meltdown if his government accepts current U.S. demands for investment without safeguards.