The central banks of the Philippines and Japan on Friday signed their amended third bilateral swap agreement (BSA), a stopgap measure for short-term liquidity problems.
The Bangko Sentral ng Pilipinas (BSP) and the Bank of Japan, which acted as the agent for Japanese Finance Minister Taro Aro, signed the restated BSA, which also took effect Friday.
Similar to the original BSA that expired this month, the restated agreement “enables the Philippines to swap its local currency against Japanese yen, in addition to US dollars of up to $12 billion equivalent for the Philippines and $500 million for Japan,” the BSP said in a statement.
“The authorities of both countries believe that the strengthened bilateral financial cooperation will contribute to the stability of financial markets, promote the use of local currency including the Japanese yen in Asia in the medium term, and thereby further develop growing economic and trade ties between the Philippines and Japan,” according to the BSP.
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During a meeting of finance ministers and central bank governors from the Asean and Japan in Yokohama last May, the Japanese government proposed to extend its various BSAs with the different countries.
“As economic ties between Asian and Japan strengthen amid the Asean financial integration and increasing activities of Japanese firms in the region, it is important to promote the use of local currencies in cross-border transactions in the region over the medium term. Facilitating the funding of yen in Asean will contribute to further regional stability. Meanwhile, there is also renewed demand for strengthening regional financial safety net in view of recent uncertainty in the global economy,” read the joint statement issued after the meeting.
