Japan and South Korea agreed Saturday in Tokyo to increase the size of a bilateral currency swap agreement to $15 billion from $7 billion to help address potential financial crises in Asia.
Finance Minister Sadakazu Tanigaki and his South Korean counterpart, Han Duck Soo, said they reached the agreement during the first of a series of annual meetings.
The agreement, expected to be signed later this month, would enable Japan to extend up to $10 billion to South Korea and to receive up to $5 billion from Seoul, a Finance Ministry official said.
That would replace the current one-way accord under which Japan can provide $7 billion to South Korea, the official said.
The deal is also meant to strengthen the Asian regional currency swap framework known as the Chiang Mai Initiative -- a network of money swap arrangements to cope with sharp falls in the value of Asian currencies, such as the 1997-1998 financial crisis.
Tanigaki and Han said they agreed to step up calls on the International Monetary Fund to offer emerging economies, especially those in Asia, greater representation by reviewing the quota system it uses for allotting voting power.
Tanigaki has repeatedly said that if the quota distribution fails to reflect Asia's growing economic clout, the legitimacy of the entire system will be called into question.
During the one-day meeting, Tanigaki and Han discussed fiscal and tax issues in their economies, their debt management policies, and the world and Asian economies.
Tanigaki said he and Han agreed to boost cooperation on tackling issues of common concern such as the rapid aging of the both nations' populations and ways to enhance competitiveness amid rising powerhouses China and India.
They said they hope such cooperation will lead to improvements in overall bilateral relations.