Japan and South Korea decided not to renew their 14-year-old bilateral currency swap agreement, the Japanese Finance Ministry said Monday.
"The authorities of Japan and Korea agreed that the bilateral swap arrangement between the Bank of Japan, acting as the agent for the Minister of Finance of Japan, and the Bank of Korea, will expire on February 23 as scheduled," the ministry said in a statement. The swap deal currently allows both countries to obtain dollars by swapping their local currencies up to USD 10 billion during financial emergencies.
Established in 2001, the program was originally designed to help South Korea retain stability in its currency amid global financial market turmoil caused by the European debt crisis.
The size of the swap arrangement grew to USD 70 billion in 2011 following a series of global financial crisis, but shrank to USD 10 billion in 2013 amid a persistent territorial disputes and different views on Japan's 1910-1945 colonial rule of the Korean Peninsula.
Despite the decision to terminate the deal, the ministry said the finance ministers of the two countries will resume their regular talks in May in Tokyo after a 30-month hiatus.
The authorities of Japan and South Korea also agreed to cooperate in an appropriate manner as the need arises, according to the statement.