(Original title: South Korea is talking about tripartite currency exchange)

The Bear Observer Network.

On October 22, Hong Kong¡¯s South China Morning newspaper quoted an informed source as saying that China was negotiating with Japan and South Korea on the possibility of establishing a trilateral currency exchange mechanism to strengthen regional financial security networks and deepen economic cooperation in the context of U.S. President Trump¡¯s launch of a trade war.

The source said that during the autumn annual meeting of the International Monetary Fund and the World Bank in Washington last week, the governor of the People¡¯s Bank of China, Ban Guongxiang, discussed the issue with Bank of Japan governor Zhoda Yong-sen and Bank of South Korea governor Li Chang Zhang.

"They have been promoting trilateral cooperation and negotiations have been going on for some time." The source, who declined to be named, said. The South China Morning Post said the People's Bank of China had not responded to requests for comment.

According to the website of the People's Bank of China, on October 15, the 14th China, Japan and South Korea Central Bank Governors Meeting was held in Washington. Kazuo Ueda, President of the Bank of Japan, presided over the meeting, and Pan Gongsheng, President of the People's Bank of China, and Lee Chang-yong, President of the Bank of Korea, attended the meeting. At the meeting, all parties exchanged views on issues such as the recent economic and financial situation. The 15th China, Japan and South Korea Central Bank Governors Meeting will be hosted by the Bank of Korea in 2026.

The Governor of the Central Bank of China met with the People's Bank of China website

The currency exchange mechanism is a commonly used tool for providing liquidity between central banks and can also provide financial support during debt crises in addition to multilateral institutional rescue operations.

This policy discussion was held against the backdrop of China's long-term promotion of the internationalization of the RMB, aiming to hedge the impact of the US dollar and promote the conclusion of a free trade agreement among China, Japan and South Korea. The three East Asian economies, China, Japan and South Korea, together account for one-quarter of the global economy.

While both South Korea and Japan are U.S. ¡°close allies¡±, they are also hit by Trump¡¯s high tariffs, with South Korea and Japan ranked as China¡¯s fourth-largest trading partner and sixth-largest trading partner for 2024.

It is unclear how the China-Japan-Korea trilateral monetary agreement will be reached, and whether it will be incorporated into the framework of the ¡°Chiang Mai Initiative¡± and the ¡°Chiang Mai Initiative¡± is a regional monetary exchange agreement signed in May 2000 between ASEAN ten countries and China-Japan-Korea (10+3) finance ministers in Chiang Mai, Thailand, aimed at solving international receipts and short-term liquidity difficulties of member states through the Common Foreign Reserve Fund, including the expansion of ASEAN¡¯s original currency exchange mechanism and the establishment of a bilateral exchange agreement between China-Japan and ASEAN countries.

More discussions on such cooperation are likely to take place during upcoming ASEAN and APEC summits.

The South China Morning Post said that another person familiar with the matter revealed that discussions on currency swaps have been ongoing, but the most likely outcome is that China, Japan and South Korea reach separate bilateral agreements.

China and South Korea signed a five-year currency exchange agreement for a total amount of 400 billion yuan, which will expire this month.The Chinese side signed a three-year bilateral currency exchange agreement with Bank of Japan in October 2024 for a total amount of 200 billion yuan.

The currency swap mechanism between Japan and South Korea will be restored in December 2023 with a scale of US$10 billion (approximately 71.2 billion yuan) for a three-year period.

Last week, Pan Gongsheng, governor of the People's Bank of China, attended the 52nd International Monetary and Financial Committee meeting and submitted a statement warning that strengthening the global financial safety net was "imminent" and pointed out that trade tensions were weakening global financial stability.

From October 16 to 17, 2025, the International Monetary Fund held the 52nd International Monetary and Financial Committee (IMFC) meeting in Washington, D.C., USA. The website of the People's Bank of China

As of the end of September, China had signed currency exchange agreements with 32 central banks worldwide for a total amount of RMB 4.5 trillion, including a RMB 350 billion currency exchange agreement renewed with the European Central Bank, and a five-year RMB 3.5 trillion currency exchange agreement renewed last week in Washington with Iceland.

According to reports, an official from the Macroprudential Administration of the People's Bank of China said in an interview with the Financial Times last week: "The local currency swap network established by the People's Bank of China has become an important part of the global financial safety net."

The unnamed official added: "In the future, the central bank will gradually expand the scope of local currency swap cooperation, focus on deepening cooperation with countries and regions with close economic and trade ties, effectively use swap funds, increase liquidity supply, and promote trade and investment facilitation."

According to the website of the Ministry of Foreign Affairs, on March 22, this year, the Political Bureau of the Central Committee of the Communist Party of China and Foreign Minister Wang Yi, attending the 11th China-Japan-Korea Foreign Ministers' Meeting, said that at present, the change in the century has accelerated, the world economic growth is weak, geopolitical conflict has intensified, the index of openness has continued to decline. China-Japan-Korea, as an important country in the Asia-Pacific and the global economy, should adhere to the open economic direction, raise the flag of free trade, firmly uphold the rules-based multilateral trade system, create an open, inclusive, non-discriminatory international economic environment, promote inclusive economic globalization. To actively drive regional cooperation, joint

President Xi Jinping attends the 11th Sino-Japanese Foreign Ministers' Meeting