Currency swap contracts with Japan raised to $70 bln

President Lee Myung-bak and Japanese Prime Minister Yoshihiko Noda agreed at their summit talks in Seoul to expand the size of currency swap contracts from 13 billion to 70 billion U.S. dollars to guard against foreign currency shortages.

"Amid mounting uncertainty in the global economy, strengthening currency cooperation is important to preemptively stabilize financial markets,” President Lee said.

The bilateral agreement has expanded the size of the won-yen currency swap between the Bank of Korea and the Bank of Japan to 30 billion dollars.

In addition, the swap line of 30 billion dollars between Korea’s central bank and the Japanese Finance Ministry will be established aside from another swap line worth 10 billion dollars set under the regional currency swap agreement Chiang Mai Initiative.

President Lee also mentioned issues on the past history of the two countries, saying, “Forging a way forward for the future without forgetting history is the basis of the bilateral relationship,” adding, “To resolve issues stemming from past history, Japan’s active efforts are needed.”

The two leaders, however, did not place their past history on the agenda of their 80-minute meeting.

They concurred on strengthening working-level cooperation to resume free trade negotiations that were suspended in 2006.

President Lee said, “We will resume negotiations as soon as possible,” but stressed the necessity of gathering sufficient opinions from each sector before resuming negotiations.

“Both countries should benefit from the free trade agreement and each industry has different opinions (on the accord`s necessity,” he added.

In his visit to Seoul, the Japanese prime minister returned to Korea “Jeongmyo Eoje,” the collection of writings by Korean King Jeongjo of the Joseon Dynasty and three collections of Joseon royal protocols that were plundered by Japan under Japanese colonial rule.

srkim@donga.com