3 countries to invest in each other's bonds
Source: Agencies |
May 4, 2012, Friday
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Print Edition
Print Edition
CHINA, Japan and South Korea agreed yesterday to boost cross-investment in government bond markets, worth nearly a combined US$15 trillion, in a move that will better prepare the countries to protect financial markets from external shocks.
The three economic powers sought a formal agreement, a rare one on securities investment, to ease mutual concerns about possibly massive cross-border fund flows and because their capital markets are at different levels of development.
The move also comes as many of the heavily exposed economies in East Asia have struggled to find ways to avoid a repeat of the 1997/98 Asian financial meltdown and other turmoil that has struck during times of crises originating outside the region.
"We agreed to promote the investment by the foreign reserve authorities in (each other's) government bonds, further strengthen our cooperation, including information sharing, and thereby enhance the regional economic relationship among the three countries," they said in a joint statement issued after a meeting of finance and central bank chiefs in Manila.
Local currency-denominated government bonds in the three countries amounted to US$14.61 trillion at the end of 2011, with Chinese and Japanese bonds 97 percent of the total, Asian Development Bank data showed.
"We agreed to have working level officials of the three countries further discuss the methods and procedures of the cooperation," they added, as officials in Seoul have said the three were seeking ways to avoid conflicts that may arise from one country's holdings of another's bonds.
China started buying South Korea's local-currency government bonds a few years ago but Seoul began to invest in Chinese bonds only recently. Japan also recently announced its plan to buy China's bonds and is considering buying South Korea's.
The three economic powers sought a formal agreement, a rare one on securities investment, to ease mutual concerns about possibly massive cross-border fund flows and because their capital markets are at different levels of development.
The move also comes as many of the heavily exposed economies in East Asia have struggled to find ways to avoid a repeat of the 1997/98 Asian financial meltdown and other turmoil that has struck during times of crises originating outside the region.
"We agreed to promote the investment by the foreign reserve authorities in (each other's) government bonds, further strengthen our cooperation, including information sharing, and thereby enhance the regional economic relationship among the three countries," they said in a joint statement issued after a meeting of finance and central bank chiefs in Manila.
Local currency-denominated government bonds in the three countries amounted to US$14.61 trillion at the end of 2011, with Chinese and Japanese bonds 97 percent of the total, Asian Development Bank data showed.
"We agreed to have working level officials of the three countries further discuss the methods and procedures of the cooperation," they added, as officials in Seoul have said the three were seeking ways to avoid conflicts that may arise from one country's holdings of another's bonds.
China started buying South Korea's local-currency government bonds a few years ago but Seoul began to invest in Chinese bonds only recently. Japan also recently announced its plan to buy China's bonds and is considering buying South Korea's.
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