TOKYO (MNI) – Amid the bilateral territorial dispute over small
islands, a senior Japanese official proposed on Thursday that Tokyo and
Beijing should consider using a yen-yuan swap agreement to ensure ample
liquidity in direct dealings between the two currencies.
Tatsuo Yamasaki, Director-General of the International Bureau of
the Ministry of Finance, also told a seminar on the internationalization
of the yuan that the two economic powers should use financial markets in
Hong Kong to facilitate yen-yuan trading.
“The Bank of Japan and the People’s Bank of China have been working
on the yen-yuan currency swap agreement” since they concluded it in
March 2002, he said. “But when offshore transactions in the yuan
increase, it becomes difficult for the private sector to ensure
liquidity, and that’s when we could use currency swaps to secure
liquidity.”
Yamasaki also suggested that Japanese banks operating in China
could use their JGB holdings as collateral to receive funds in yuan.
Beijing has already allowed the Japan Bank for International
Cooperation to issue panda bonds — bonds denominated in the yuan from a
non-Chinese issuer sold in China, he said.
The direct yen-yuan trading, which began on June 1 in Tokyo and
Shanghai, is aimed at facilitating trade settlements between the two
countries and lowering currency transaction costs.
Last month, then Japanese Finance Minister Jun Azumi said Japan and
China are expected to maintain direct yen-yuan trading and
cross-holdings of each other’s government bonds despite the
long-standing territorial dispute that has flared up again this year.
tokyo@marketnews.com
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[TOPICS: M$A$$$,M$J$$$,MGJ$$$,M$Q$$$,M$$FX$]]
