South Korea and Canada have signed a deal
for a bilateral currency swap. That’ll allow both countries to provide liquidity
to each other if the need arises. The deal is unique in that it has no limit
on the amount of currency to be provided and no expiration date. It’s hoped that the swap arrangement will
help both countries ride out any future financial emergencies more smoothly. Kim Hyesung has the details. A standing bilateral currency swap deal between
South Korea and Canada that does not stipulate ceilings or a maturity date has been reached. The Bank of Korea said Thursday that the deal,
which takes effect immediately, will enable the Bank of Canada to provide Canadian dollars
to South Korean financial institutions and the South Korean central bank to provide Korean
won to financial institutions in Canada. Finance Minister Kim Dong-yeon said the liquidity
swap deal means South Korea has secured a powerful “safety net” that can be used in
case of a crisis. The Canadian dollar is the sixth most traded
currency in the world. The deal is expected to improve South Korea’s
overseas credibility and help both countries strengthen their respective buffers against
any external shocks. South Korea has signed a number of currency
swap deals since the global financial crisis with nations such as Indonesia, Australia
and Malaysia. Seoul also agreed to extend a 56 billion U.S.
dollar currency swap deal with Beijing last month. Kim Hyesung, Arirang News.