South Korea’s Ministry of Economy and Finance is considering resuming a financial ministerial meeting with Japan to discuss measures for economic cooperation between the two countries, according to a government source.

Following his meeting with Japanese Prime Minister Fumio Kishida last Thursday, South Korean President Yoon Suk Yeol said that he and Kishida “agreed to promptly restore bilateral consultative bodies to discuss common interests between the two countries, including strategic dialogues between diplomatic and economic authorities.” It was learned that the two leaders did not specifically discuss the resumption of a meeting between their financial ministers during the summit.

Meeting to discuss financial cooperations between the two countries began in 2006, but remains suspended since the establishment of a statue of a girl symbolizing Korean victims of Japan’s wartime sexual slavery in front of the Japanese consulate in Busan in 2017 and Japan’s export ban of key chip materials to Korea in 2019.

The last meeting was in August 2016 between then Deputy Prime Minister and Minister of Finance Yoo Il-ho and Japanese Deputy Prime Minister and Finance Minister Taro Aso.

As the two countries have agreed to increase financial and foreign exchange cooperation as part of an effort to normalize bilateral relations, both governments are expected to restore a dialogue channel between their financial authorities to come up with concrete measures in the financial and foreign exchange sectors.

Cooperation between the two countries in the financial and foreign exchange sectors usually involves strengthening cooperation on the international stage, such as the G20 meeting or the meeting of the Association of Southeast Asian Nations, Korea, China and Japan.

The Korea-Japan currency swap, which is at the center of interest, is not likely to get on the table right away. Given the recent financial market conditions, there seems to be a perception that it is not an urgent issue. A currency swap allows a country to borrow dollars from the other country in return for its currency in the event of an emergency, such as a foreign exchange crisis.

The Korea-Japan currency swap started at $2 billion in July 2001 and increased to $70 billion at the end of 2011, but has been suspended since February 2015 as relations between the two countries soured.

By Pulse

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