LOC13:03
10:03 GMT
TOKYO, May 5 (KUNA) -- Japan on Friday proposed creating bilateral currency swap arrangements of up to USD 40 billion with Association of Southeast Asian Nations (ASEAN) in times of financial crisis.
The proposal was made during a meeting of finance ministers and central bank chiefs from Japan and the 10-member ASEAN in Yokohama near Tokyo, according to a joint statement issued after the gathering.
"As economic ties between ASEAN and Japan strengthen amid the ASEAN financial integration and increasing activities of Japanese firms in the region, it is important to promote the use of local currencies in cross-border transactions in the region over the medium term," the statement said, adding that facilitating the funding of Japanese yen in ASEAN will contribute to further regional financial stability.
To address short-term liquidity problem, the new scheme will allow ASEAN countries to withdraw yen funds, in either dollars or the yen, under existing bilateral currency swap agreements.
Referring to the 2008 global financial crisis, Japanese Finance Minister Taro Aso pointed out risks of the dependency on US dollars in the market. "The yen is a stable currency.
We had strong requests from ASEAN countries, and I think it is important to answer their needs," Aso told reporters after the meeting.
The currency swap is a device useful in times of economic stress, when normal foreign exchange markets can seize up, in which financial authorities agree to buy local currency with something much more liquid -- usually the US dollar.
ASEAN groups are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.
Separately, Japan signed a bilateral currency swap deal worth USD 3 billion with Thailand and agreed to enter a similar arrangement with Malaysia. (end)
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