【Text by Observers Network, Xiong Chaoran】On October 22, the South China Morning Post reported that China is negotiating with Japan and South Korea on the possibility of establishing a trilateral currency swap mechanism to strengthen the regional financial safety net, while deepening economic cooperation against the backdrop of the trade war initiated by US President Trump. The report emphasized that Japan and South Korea are both US allied countries.

A source said that during the International Monetary Fund and World Bank Autumn Meetings in Washington, US, Governor of the People's Bank of China Pan Gongsheng had discussions with Governor of the Bank of Japan Haruhiko Kuroda and Governor of the Bank of Korea Lee Ju-yeol on this issue.

"They have been pushing for tripartite cooperation, and the negotiations have been ongoing for some time," said an unnamed source. The South China Morning Post noted that the People's Bank of China has not yet responded to the request for comment.

According to the website of the People's Bank of China, the 14th Meeting of the Governors of the Central Banks of China, Japan and South Korea was held in Washington on October 15. Governor of the Bank of Japan Haruhiko Kuroda chaired the meeting, and Governor of the People's Bank of China Pan Gongsheng and Governor of the Bank of Korea Lee Ju-yeol attended the meeting. During the meeting, the parties exchanged opinions on recent economic and financial situations. The 15th Meeting of the Governors of the Central Banks of China, Japan and South Korea will be hosted by the Bank of Korea in 2026.

Meeting of the governors of the central banks of China, Japan and South Korea, People's Bank of China website

The South China Morning Post pointed out that a currency swap mechanism is a commonly used tool for providing liquidity in local currencies between central banks, and it can also provide financial support during debt crises, in addition to multilateral institution rescue actions.

This policy discussion is taking place in the context of China's long-term efforts to internationalize the RMB, aiming to offset the influence of the US dollar and promote the conclusion of the China-Japan-South Korea Free Trade Agreement. These three East Asian economies account for a quarter of the global economy.

Although South Korea and Japan are both close allies of the United States, they have also been affected by Trump's high tariffs. According to trade volume in 2024, South Korea and Japan are China's fourth and sixth largest trading partners respectively.

It is currently unclear how the trilateral currency agreement among China, Japan and South Korea will be reached, or whether it will be included in the framework of the Chiang Mai Initiative. The Chiang Mai Initiative was a regional currency swap agreement signed in Chiang Mai, Thailand, in May 2000 by the finance ministers of the ten ASEAN countries and China, Japan and South Korea (10+3), aimed at solving international balance of payments and short-term liquidity difficulties of member states through a common foreign exchange reserve fund, including expanding the original ASEAN currency swap mechanism and establishing bilateral currency swap agreements between China, Japan and South Korea with ASEAN countries.

More discussions on such cooperation may take place during the upcoming ASEAN Summit and Asia-Pacific Economic Cooperation (APEC) Summit.

The South China Morning Post stated that another source revealed that the discussion on currency swaps has been ongoing, but the most likely outcome is that China, Japan and South Korea will reach bilateral agreements separately.

The five-year currency swap agreement between China and South Korea amounts to 400 billion yuan, which will expire this month. The People's Bank of China signed a three-year bilateral currency swap agreement with the Bank of Japan in October 2024, amounting to 200 billion yuan.

The currency swap mechanism between Japan and South Korea was resumed in December 2023, with a scale of 10 billion US dollars (approximately 71.2 billion yuan), for a period of three years.

Last week, Governor of the People's Bank of China Pan Gongsheng attended the 52nd Meeting of the International Monetary and Financial Committee, and in a statement submitted, he warned that strengthening the global financial safety net is "imminent", and pointed out that trade tensions are weakening global financial stability.

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

As of the end of September this year, China has signed currency swap agreements with 32 central banks around the world, totaling 4.5 trillion yuan, including the renewed 350 billion yuan local currency swap agreement with the European Central Bank, as well as the renewed 3.5 billion yuan local currency swap agreement with Iceland for a period of five years, signed last week in Washington.

According to reports, an official from the Macroprudential Bureau of the People's Bank of China told the UK's 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 nameless official added: "In the future, the central bank will gradually expand the scope of local currency swap cooperation, focusing on deepening cooperation with countries and regions with close economic and trade ties, effectively utilizing swap funds, increasing liquidity supply, and promoting trade and investment facilitation."

According to the website of the Ministry of Foreign Affairs, on March 22 this year, Wang Yi, a member of the Political Bureau of the CPC Central Committee and Minister of Foreign Affairs, at the 11th China-Japan-South Korea Foreign Ministers' Meeting, stated that the current situation is accelerating the evolution of the century, the world's economic growth is weak, and geopolitical conflicts are intensifying, with the openness index continuously declining. As important countries in Asia-Pacific and major global economies, China, Japan and South Korea should adhere to the direction of an open economy, jointly raise the flag of free trade, firmly safeguard the multilateral trade system based on rules, create an open, inclusive, non-discriminatory international economic environment, and promote an inclusive globalization. They should actively drive regional cooperation, jointly support the construction of the ASEAN community, and create more "China-Japan-South Korea + " cooperation projects, injecting strong momentum into the development of East Asian cooperation through the vitality of trilateral cooperation. They should practice the new concept of security that is common, comprehensive, cooperative and sustainable, and jointly maintain regional peace and world tranquility. They should carry forward the traditional Eastern values of keeping promises and being trustworthy, adhere to independence and self-reliance, and grasp the destiny of Asia in their own hands.

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