TOKYO (AFP) - Japan and Southeast Asian countries are in talks over expanding currency swap arrangements to help cushion their economies in financial emergencies, an official said Thursday, ahead of a Japan-Asean summit next week.
A swap is a device useful in times of economic stress, when normal foreign exchange markets can seize up, in which financial authorities agree to buy local currency with something much more liquid - usually the US dollar.
Tokyo is now talking with five countries - Indonesia, the Philippines, Malaysia, Thailand, and Singapore - to expand or resume bilateral currency swaps, a finance ministry official told AFP.
Since the onset of the Asian currency crisis in the late 1990s, Japan has spearheaded efforts to build a multilateral currency swap agreement, now known as the Chiang Mai Initiative (CMI).
"We are discussing with a view that bilateral arrangements are faster in terms of decision-making than the multi-lateral framework," the official said.
Japan currently has a US$12 billion bilateral arrangement with Indonesia and a US$6 billion arrangement with the Philippines, but negotiators are aiming to increase the amounts, while Tokyo wants to resume bilateral deals with the three other countries, he said.
The CMI - which groups the 10 Association of Southeast Asian Nations (Asean) member countries plus China, Japan, and South Korea - is a currency swap arrangement worth a total of US$240 billion.
Japan is due to host a special summit with Asean leaders in Tokyo from December 13-15 to mark the 40th anniversary of exchanges.
A recent survey showed that Asean countries had re-emerged as Japan Inc's favoured investment destinations, with China falling off the top of the list for the first time in more than two decades because of higher labour costs and bilateral tensions.
Japan is keen to bolster its relations with countries in the region as it seeks to counter the growing influence of China.