Japan and Southeast Asian countries are in talks over expanding currency swap arrangements to help cushion their economies in financial emergencies, an official said Thursday ahead of a Japan-ASEAN summit next week.
A swap is a device useful when normal foreign exchange markets seize up, in which financial authorities agree to buy local currency with something much more liquid — usually the dollar.
Tokyo is now talking with Indonesia, the Philippines, Malaysia, Thailand, and Singapore to expand or resume bilateral currency swaps, a Finance Ministry official said.
Since the onset of the Asian currency crisis in the late 1990s, Japan has spearheaded efforts to build a multilateral currency swap agreement, now known as the Chiang Mai Initiative.
“We are discussing with a view that bilateral arrangements are faster in terms of decision-making than the multilateral framework,” the official said.