Issue Extending the Korea-Japan currency swap and deepening regional financial cooperation

Summary

In finance the report puts forward currency swaps and financial cooperation with third countries and regions as elements of its future vision. Building on a lasting consensus about the need for swaps that emerged after the Asian financial crisis, the two countries should seek to extend or renegotiate the Korea-Japan currency swap due to expire in March 2026 and enlarge its size. The report expects the future monetary order to evolve from a system centered on the US dollar toward a relatively decentralized and multipolar one, making cooperation among countries with similar interests more important. It therefore emphasizes developing existing regional financial cooperation frameworks, expanding bilateral financial transactions and cooperating within the Chiang Mai Initiative Multilateralization and the Asian Bond Markets Initiative. It also suggests broadening the use of swaps, for example by using funds from any future won-yen swap for trade settlement.