MANILA – The finance ministers and central bank chiefs of Japan, China and South Korea agreed Thursday to press ahead with purchases of each other’s bonds to further strengthen their financial cooperation.
Under the agreement, Finance Minister Jun Azumi announced that Tokyo will purchase government bonds from South Korea for the first time to diversify Japan’s foreign-exchange reserves and improve the credit-worthiness of South Korea.
In March, Tokyo agreed to purchase bonds issued by the Chinese government.
“It is better to have a wide variety in our holdings of foreign government bonds,” Azumi told reporters after a trilateral meeting held before the two-day annual meeting of the Asian Development Bank starting Friday.
Japan’s move comes after China allowed Japan to purchase up to 65 billion yuan ($10.3 billion) worth of Chinese government bonds in March. China and South Korea already buy each other’s bonds, as well as JGBs.
Azumi said the amount of South Korean bonds to be purchased hasn’t been decided. But a Japanese official said it will still take at least six months for Japan actually to buy the won-denominated assets because of the administrative work involved, and because the exact timing will depend on the situation in the market.
The three financial leaders also agreed to have working-level officials discuss specific ways to strengthen cooperation, including information-sharing, according to the joint statement released after the meeting.
They also welcomed the fact that executives from their central banks attended the meeting for the first time this year.
Central bank involvement will “serve as a more effective trilateral platform for enhanced policy dialogue and cooperation,” the statement said.
Bank of Japan Gov. Masaaki Shirakawa joined Azumi in the talks. Deputy Finance Minister Li Yong and People’s Bank of China Deputy Gov. Hu Xiaolian represented China. South Korean Strategy and Finance Minister Bahk Jae Wan and Bank of Korea Gov. Kim Choong Soo represented South Korea.