The Philippines and Japan have renewed their currency swap arrangement, which took effect on the first day of 2022.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said it signed the third Amendment and Restatement Agreement of the Bilateral Swap Arrangement (BSA) with the Bank of Japan, acting as agent for the Minister of Finance of Japan.
The central bank said the BSA is a two-way arrangement where both authorities can swap their local currencies in exchange for the US dollar.
The arrangement also enables the Philippines to swap the Philippine peso against the Japanese yen, the BSP said.
It noted that the size of the BSA remains unchanged, that is, up to $12 billion or its equivalent in Japanese yen for the Philippines, and $500 million for Japan.
The renewed BSA incorporates amendments to align the BSA with the recent amendments to the Chiang Mai Initiative Multilateralization (CMIM) Agreement.
The Chiang Mai Initiative Multilateralization is a multilateral currency swap arrangement between Association of Southeast Asian Nations (ASEAN) +3 members, which took effect in March 2020.
The CMIM core objectives are to address balance of payment and short-term liquidity difficulties in the ASEAN+3 region, and to supplement existing international financial arrangements.
The contracting parties to the CMIM agreement comprise the finance ministries and central banks of ASEAN+3 countries, namely Brunei Darussalam, Cambodia, China, Indonesia, Japan, Korea, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam.
“Japan and the Philippines believe that the BSA, which aims to strengthen and complement other financial safety nets, will further deepen financial cooperation between the two countries and contribute to regional and global financial stability,” the BSP said. — Ted Cordero/RSJ, GMA News