SEOUL • South Korea and Japan have said they will start talks on a new currency swap agreement after the countries' finance ministers met in Seoul yesterday to bolster defences against global financial uncertainties.

"South Korea offered to start talks on a currency swap agreement as part of boosting economic cooperation with Japan," South Korea Finance Minister Yoo Il Ho said.

"Uncertainties can be minimised with the more swap agreements you have, and our stance that we will push for as many as we can has not changed."

Japanese Finance Minister Taro Aso also said that the two countries recognised the need for economic cooperation.

The countries said in a joint statement that South Korea and Japan face threats from low potential growth rates and the risk of increasing global financial volatility.

South Korea's last currency swap agreement with Japan was established in 2001 and the countries let it expire in February last year at US$10 billion (S$13.6 billion). The swap line had expanded to US$70 billion in 2011 but was sized down later after political conflict between the two countries.

Details on the timing of the talks and the currencies with which the new swap line, if agreed upon, will be established will be settled in the near future.

Mr Yoo added that South Korea and Japan would act "firmly" against trade protectionism and cooperate closely on sanctions against North Korea. Both countries expressed "strong concern" over Pyongyang's nuclear programme and missile development.

South Korean finance ministry officials had initially said that a swap agreement was not on the official agenda for yesterday's talks.

REUTERS