South Korea and Switzerland agreed on a $10.6 billion currency swap deal that would enable the two countries to provide liquidity in each other’s currencies in times of crises.

The Bank of Korea said on Friday the two states would formally sign the deal on Feb. 20 in Zurich, with the agreement to take effect Mar. 1.

The three-year pact will allow Korea to exchange the Korean won into the Swiss franc or vice versa up to a limit of $10.6 billion.

“The currency swap will help improve South Korea’s global credibility and stabilize financial markets,” said Finance Minister Kim Dong-yeon.

The Swiss franc is one of the world’s six major currencies along with the U.S. dollar, the Euro, the Japanese yen, the British pound and the Canadian dollar. It is one of the most widely held foreign reserve currencies by major economies and among the most actively traded currencies in global trade and financial transactions. It has been viewed as a safe haven currency since the Second World War given the stability of the country’s government and financial system. Switzerland has the second-highest per capita GDP of $82,442 and has received top ratings from the big three credit rating agencies.

This marks Korea’s seventh currency swap agreement. Korean authorities are currently in talks with the United Arab Emirates to extend their bilateral deal.

By Lee Yoo-sup and Kim Hyo-jin

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