South Korea and Switzerland are putting in place a bilateral currency swap agreement, the Bank of Korea said on Friday, strengthening buffers against external financial shocks for both countries. The $10.6 billion agreement, to be formally signed on February 20, will let both countries provide liquidity for the counterparty to support financial stability for three years, the BOK said.
The pact will enable Switzerland to provide Swiss francs to South Korean financial institutions and for South Korea to provide Korean won to financial institutions in Switzerland, up to a limit of 11.2 trillion won, or 10 billion francs.
"The currency swap will help stabilize financial markets and raise global credibility (of South Korea)," finance minister Kim Dong-yeon told reporters after meeting BOK Governor Lee Ju-yeol in Seoul. Lee said he will meet Thomas Jordan, chairman of the Swiss National Bank's governing board, to sign the agreement in Zurich. South Korea has added a number of currency swap agreements in the past year, including its first with Canada, signed in November.