By Tetsushi Kajimoto and Leika Kihara
TOKYO (Reuters) – Japanese and South Korean financial authorities are preparing for talks on wide-ranging financial cooperation, including the possible resumption of a bilateral currency swap, a government source with knowledge of the matter told Reuters.
The two sides discussed the matter during talks held earlier this month in Seoul between their financial diplomats. They will possibly be on the agenda when their finance ministers meet in Tokyo on June 29, the source said, speaking on condition of anonymity due to the sensitivity of the issue.
“The finance diplomats discussed various cooperation in regional financial stability, including multilateral and bilateral currency swap arrangements,” the source said.
“These could possibly be put on the agenda at our bilateral finance ministers’ dialogue and we are making final arrangements.”
The source was referring not just to bilateral financial cooperation, but also multilateral currency swap arrangements, such as the Chiang Mai Initiative Multilateralisation (CMIM).
The bilateral swap arrangement, a backstop against a currency crisis, was seen as a symbol of financial cooperation between the neighbours.
But it expired in February 2015 amid worsening relations over issues related to Japan’s occupation of Korea before and during World War Two, such as “comfort women”, a euphemism for women forced into prostitution and sexually abused at Japanese military brothels, and other forced labour.
(Reporting by Leika Kihara and Tetsushi Kajimoto; Editing by Chang-Ran Kim, Robert Birsel and Sharon Singleton)
