Japan-South Korea swap, dare to consider "Japanese beneficial"
JapanS-KoreaSwapDareToConsiderJapanesBeneficial1
한국의 스왑 굳이 '일본의 장점 "을 생각해 보면3 한국의 스왑 굳이 '일본의 장점 "을 생각해 보면1Severe shortage of dollars .. Cross currency swaps in Korea !
(with Professor Kim Tae Jung ) | Choi Yan Mystery Economic Talk2020/03/24
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In recent days, the Korean side has been eagerly awaiting Japan-Cross Currency swap.
Yesterday, the Korean Won exchange rate seems to have recovered somewhat, but it is unclear how long the lull will continue.
Under these circumstances, the purpose of posting this article on " [Material] Minutes of Japan-Korea (Cross Currency) Swap on April 16 , 2014 " on this website is to write this article.
This is because the Korean side has recently been eagerly awaiting “Japanese Cross Currency Swap”.
Minutes 6 years ago
yesterday's
[자료] 2014 년 4 월 16 일 한일 스왑의 회의록1』, which is rare for this website, was a reprint of the original Diet material almost as is.
About six years ago, on April 16 , 2014 , member of the House of Representatives at the time, 三木圭恵（Keie Miki ）(member of the Japan Restoration Association), joined the Japanese Cross Currency this is a transcript of statements made by Prime Minister 麻生太郎（Taro Aso） (Deputy Prime Minister and Minister of Finance), 山崎達雄（Tatsuo Yamazaki）(at that time) and then Director of the International Affairs Bureau of the Ministry of Finance (at that time).
The details of the exchange can still be confirmed on the " Lower House website ", but since the link is a bit long, [Material] Minutes of the Japan-South
Korea Swap on April 16 , 2014 ], And reprinted the relevant sections in uncut form, and summarized the summary in bullets.
At first, the original text was a bit too long, so I wondered, "Is it okay to just summarize the original text in bullets instead of posting the entire text?" I decided to post the original text as it is in uncut.
After all, I thought it was necessary to secure the "traceability" of the discussion.
Accurate fact recognition
Japan-Korean Cross Currency Swap is a Support to Korea
By the way, Mr. Miki (at that time), Prime Minister Taro Aso (* The official position under the Abe administration is the Minister of Finance, but he is called "Prime Minister Aso" in this paper), Mr. Yamazaki (at that time) About the three people's remarks, it is very interesting to reconstitute the expressions, supplement the words, and restructure them.
First and foremost is Mr. Miki's next point.
Japan-Cross Currency Swap: Japan, which has abundant foreign exchange reserves, reduces the risk of a fall in Korean currencies, which have low foreign exchange reserves and short-term foreign debt with a maturity of less than one year, and European and American capital flows into the Korean economy Is helping ( some businessmen point out )
The point that the " Japanese-Cross Currency Swap is a support to Korea " has a positive point.
This is because Japan-Korean Cross Currency swaps are unprecedented in the world, because they are “ Cross Currency swaps that can be withdrawn in US dollars ”.
Currently, the only US dollar-denominated swaps held by Korea are CMIM, which is a " multilateral currency swap '' with high hurdles to withdraw, and its use of funds is limited to supplying liquidity to private financial institutions. There is no foreign exchange swap, and there is no so-called “US dollar denominated cross currency swap” (Chart 1).
Exhibit 1
Swap agreements currently concluded by foreign countries with Korea
(*including "self-named")
|
Partner country and expiration date |
Amount and dollar equivalent |
Korean won and dollar equivalent |
|
China ( 2020/10/13 ?) |
360 billion yuan ドル $ 50.9 billion |
64 trillion won ≒ $ 52.63 billion |
|
Switzerland ( 2021/2/20 ) |
10 billion francs ≒ $ 10.33 billion |
11.2 trillion won ≒ $ 9.21 billion |
|
UAE ( 2022/4/13 ) |
$ 20 billion ≒ $ 5.44 billion |
6.1 trillion won ≒ $ 5.02 billion |
|
Malaysia ( 2023/2/2 ) |
MYR15 billion ≒ $ 3.46 billion |
5 trillion won ≒ $ 4.11 billion |
|
Australia ( 22/2023 ) |
AUD 12 billion ≒ $ 7.25 billion |
9.6 trillion won ≒ $ 7.89 billion |
|
Indonesia ( March 5, 2023 ) |
Rp115 trillion ≒ $ 7.50 billion |
10.7 trillion won ≒ $ 8.80 billion |
|
Cross Currency Swap |
Subtotal $ 84.43 billion |
106.6 trillion won ≒ $ 8.766 billion |
|
Cross Currency Swap ( CMIM ) |
$ 3.84 billion |
― |
|
Cross Currency Swap |
$ 122.83 billion total |
― |
|
Canada (indefinite period) |
* Unlimited amount |
― |
|
United States ( September 19, 2020 ) |
* $ 60 billion |
― |
(Source:Created by the author based on press releases from central banks,etc. in each country.)
The US dollar equivalent is calculated based on the exchange rate displayed in the WSJ market column as of the night of yesterday.
The reality of the currency (Cross Currency) swap with China is unknown.
In addition, swaps with Canada and the United States indicated by * are foreign currency (Foreign Exchange) swaps, not cross currency swaps.
Characteristics of Korea's funding structure
So why does Korea need US dollar swaps?
In this regard, the following remarks made by Prime Minister Aso can be helpful.
From the Japanese point of view, Korea is not a long-term and stable source of funding, it is using a short-term source to raise foreign currency, and there are no large international banks. It has the characteristic that cash flow is likely to be unstable due to the crisis
This is consistent with what is regularly mentioned on this website.