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S Korea and China promote regular currency-swap agreement

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S Korea and China promote regular currency-swap agreement
13:34, July 07, 2010

As an important measure to prevent a foreign exchange crisis, South Korea and China are promoting a regular currency-swap agreement, and this program will also help to internationalize the RMB.

After the outbreak of the global financial crisis, the South Korean government signed a 26 billion U.S. dollars currency-swap agreement (based on the exchange rate at the time, it was equivalent to 180 billion yuan, 38 trillion won) with China in December 2008, and the agreement will expire in April 2012.

The South Korean government had also considered establishing an unlimited currency-swap relationship with the United States and Japan, but after considering the feasibility, it went with China as its final choice.

A South Korean government official said that in 1994, the United States and members of the North American Free Trade Agreement, Canada and Mexico, signed an unlimited currency-swap agreement amounting to 2 billion U.S. dollars and 6 billion U.S. dollars, respectively. South Korea and China may use this model. The unlimited currency swap agreement between China and South Korea will also help the RMB to become an international reserve currency.

By People's Daily Online

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