China, Japan and South Korea agreed to encourage investment in each others’ bonds, according to a joint statement released by the Bank of Korea.
The nations aim to “further strengthen our cooperation” amid risks and uncertainties for the global economy, the trio said after a meeting of central bank governors and finance ministers in Manila today.
Japan will start buying South Korean bonds as part of efforts to diversify the larger economy’s foreign-exchange reserves, Japanese Finance Minister Jun Azumi told reporters in Manila. Purchases will start with a small amount, he said.
“Today’s statement from the three countries shows the governments’ will to enhance the status of Asian currencies by encouraging investment within the region,” said Choi Seok Won, head of research at Hanwha Securities Co. (003530) in Seoul. “It would have the effect of reducing volatility” from “money coming in and out from other regions.”
Japan, China, South Korea and 10 Southeast Asian nations are finishing a plan to boost the so-called Chiang Mai Initiative Multilateralization agreement to $240 billion. The expansion of the foreign-currency pool will make it “more effective as a liquidity safety net,” according to Philippine central bank Governor Amando Tetangco.
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