Japanese Finance Minister Shoichi Nakagawa and his South Korean counterpart Kang Man-Soo agreed to help launch a multilateral currency swap scheme for Asia, when they held talks in Washington on the sidelines of the Group of Seven finance chiefs' meeting, Jiji Press and Kyodo News reported.

The ministers agreed to speed up the implementation of an agreement in May by finance ministers of 13 Asian nations to set up a foreign exchange pool of at least US$80 billion (S$118.68 billion) to be used in the event of another regional financial crisis, the reports said.

The reports came as the South Korean won plunged to a 10-year low against the dollar last week and South Korean President Lee Myung-Bak accused some businesses and investors of trying to capitalise on financial turmoil.

'As South Korea is Japan's closest neighbour, we want to keep close contacts with them,' Mr Nakagawa was quoted as saying by Jiji Press after the meeting.

The creation of the pool is a big step towards the creation of an Asian equivalent of the Washington-based International Monetary Fund (IMF).

During the 1997-1998 Asian financial crisis Indonesia, Thailand and South Korea had to borrow heavily from the IMF to boost their finances as investors sold their currencies.

The IMF forced the governments of the three nations to make unpopular spending cuts, sell state-owned firms and raise interest rates in exchange for the loans of over US$100 billion. -- AFP