US and South Korea Finance Ministers: "Foreign Currency Liquidity Supply if Needed"... Possibility of Resuming Currency Swap

Choo Kyung-ho Meets with US Treasury Secretary Yellen... Korea Expresses Willingness to Join Russia Oil Price Cap System

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho (left) and U.S. Treasury Secretary Janet Yellen shake hands at the Korea-U.S. Finance Ministers' Meeting held on the 19th at Lotte Hotel, Sogong-dong, Jung-gu, Seoul. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Sejong=Reporter Kwon Haeyoung] The finance ministers of South Korea and the United States agreed that they have the capacity to implement various cooperative measures, including 'liquidity supply facilities,' if necessary, to stabilize the financial and foreign exchange markets. This is interpreted as leaving open the possibility of resuming the Korea-US currency swap in the future. The South Korean side expressed its intention to join the US demand for implementing a price cap on Russian crude oil.

On the 19th, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho held a Korea-US finance ministers' meeting with US Treasury Secretary Janet Yellen at the Lotte Hotel in Sogong-dong, Seoul, to discuss these matters. Both sides agreed that the economic cooperation relationship between Korea and the US should also expand and evolve in line with the 'Global Comprehensive Strategic Alliance' declared by the two heads of state at the Korea-US summit in May.

Deputy Prime Minister Choo and Secretary Yellen reviewed recent financial and foreign exchange market trends and reaffirmed the strengthening of cooperation related to the foreign exchange market between the two countries. Despite the recent increase in volatility of the won-dollar exchange rate, both sides assessed that foreign currency liquidity in Korea remains sound and stable due to foreign exchange soundness systems, but they shared the recognition that they have the capacity to implement cooperative measures such as liquidity supply facilities if necessary. They also agreed on close and proactive cooperation regarding the foreign exchange market. Amid growing calls domestically for the conclusion of a Korea-US currency swap agreement, this is interpreted as leaving open the possibility of further discussions and cooperation in the future.

Deputy Prime Minister Choo stated, "Currently, Korea's foreign currency liquidity is stable, but we are thoroughly monitoring the financial and foreign exchange market situation, paying attention to sudden fluctuations in global financial market liquidity and regional economic security risk factors. We plan to meticulously reorganize contingency plans in preparation for emergencies."

South Korea clearly expressed its intention to join the implementation of the price cap on Russian crude oil. Secretary Yellen requested the necessity of the price cap on Russian crude oil and South Korea's active participation, and Deputy Prime Minister Choo expressed that Korea also sympathizes with the purpose of introducing the price cap and is willing to participate. He emphasized that the price cap should be effectively designed to contribute to stabilizing international oil prices and consumer prices.

Both sides also agreed on the importance of strategic economic cooperation between Korea and the US amid complex crises such as supply chain disruptions, sharp rises in raw material prices and inflationary pressures following the Ukraine situation, and the ripple effects of rapid monetary tightening. They shared the view on the necessity of close policy coordination between the two countries to respond to global supply chain disruptions and unfair market distortion practices.

Furthermore, both sides agreed to strengthen cooperation on global health issues such as climate change response and pandemics. Deputy Prime Minister Choo requested the US's continued interest and support for the Green Climate Fund (GCF), which has its secretariat in Korea, and announced plans to contribute $30 million to the Pandemic Fund (FIF) to be established within the World Bank (WB).