South Korea and Canada signed a standing bilateral currency swap agreement enabling the two states to provide one another with liquidity in times of crisis, the Bank of Korea said on Thursday.

Effective immediately, the agreement enables the Bank of Korea to provide liquidity in Korean won to Canadian financial institutions, and the Bank of Canada in Canadian dollars to Korean financial institutions, the Korean central bank said in a statement.

Korean currency closed Thursday at 1,101.4 won against the U.S dollar, up 10.9 won from the previous session.

The BOK Governor Lee Ju-yeol and his Canadian counterpart Stephen S. Poloz signed the agreement at the Canadian central bank’s headquarters in Ottawa, Canada on Wednesday (local time).

It is the first currency swap arrangement between the two countries and has no ceiling or maturity in funding, allowing individual financial institutions of each county set their own terms on size and maturity.

With the highest credit rating of AAA from global rating agencies such as Standard & Poor’s, the Canadian dollar is regarded as one of reserve currencies.

The currency swap agreement has secured a strong “safety net” against times of crisis, said Kim Dong-yeon, Korea’s deputy prime minister and finance minister in a press briefing in Seoul.

Currently, Korea has currency swap agreements with China, Indonesia, and other countries worth a combined $116.8 billion, excluding a deal worth $5.4 billion with the United Arab Emirates in negotiation for an extension. Korea extended currency swap agreements with Malaysia, Australia, Indonesia, and China this year.

By Kim In-oh and Cho Jeehyun

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