Japan, China Mull New Currency Swap Deal

Tokyo, Jan. 12 (Jiji Press)--The Japanese and Chinese central banks are in the final stages of talks on concluding a new currency swap agreement between them, sources familiar with the matter told Jiji Press on Tuesday. The deal will allow the Bank of Japan to receive yuan from the People's Bank of China in exchange for yen for supply to commercial banks in Japan during a financial crisis, the sources said. The move comes after the previous agreement, concluded in 2002 to allow the PBOC to receive yen from the BOJ in return for yuan for use in market intervention in times of currency crisis, expired in 2013 when the two countries' relations were strained. At present, China has ample foreign exchange reserves totaling more than 3 trillion dollars, making it unlikely that the PBOC will run into funding shortages when the need for massive currency market intervention arises. Because of this, the planned new agreement is mainly designed to address a possible situation in which Japanese commercial banks will face difficulty raising yuan on the market during a crisis, the sources said. The effort by the BOJ and PBOC to conclude the new currency swap deal comes as yuan transactions by Japanese commercial banks are expected to grow in line with an expansion of China's economy. Talks between the two central banks on financial market cooperation continued even after the previous swap agreement expired. END