Korea and Japan Pledge Deeper Financial Ties, Currency Stability, Supply-Chain Resilience

Koo Yoon-cheol, Korea’s deputy prime minister and Minister of Strategy and Finance, met in Tokyo with Japan’s Finance Minister Satsuki Katayama for the 10th Korea-Japan Finance Ministers’ Meeting, held at the Japanese Ministry of Finance. The gathering brought together the Korean and Japanese finance chiefs to exchange views on current and future economic and financial cooperation.

This year’s meeting was the first since both countries formed new governments, and officials described it as a candid forum to discuss shared challenges and policy responses in economics and finance, including both bilateral and multilateral cooperation.

The two sessions covered different themes. In the first session, the ministers compared notes on domestic and external economic conditions and the major policy priorities of their new governments, agreeing that the global economy remains on a trajectory of solid growth but faces ongoing geopolitical and other risks. They examined the Middle East situation and volatility in financial markets, stressing the need for stable energy supplies and exploring opportunities in AI-related investment to spur growth.

They also voiced serious concerns about rapid depreciation in their currencies, underscoring the importance of closely monitoring foreign exchange markets and taking appropriate measures to prevent excessive fluctuations or disorderly movements.

In the second session, the ministers discussed economic security and supply-chain resilience, including diversification of critical mineral supplies, and pledged to deepen policy coordination in these areas. They reaffirmed support for the Chiang Mai Initiative Multilateralisation (CMIM) within ASEAN+3 and highlighted the need to strengthen regional financial safety nets. They also agreed to advance cooperation on multilateral forums such as the G20 and G7 and to bolster cooperation among customs authorities, centering on the Korea-Japan Customs Officers’ Meeting planned for April in Korea.

The officials welcomed Korea’s plan to include its government bonds in the World Government Bond Index (WGBI) and the government’s outreach to international investors. They also noted the improvement in Korea’s FX and capital-market environment, which they said would ease Japanese institutional investors’ participation.

Both sides reaffirmed the importance of bilateral currency-swap arrangements and other rapid liquidity mechanisms, with continued discussion of ways to enhance these tools. They agreed to broaden the partnership by maintaining regular deputy-level talks, staff exchanges, and continued collaboration among policy research institutions.

The ministers said the Korea-Japan Finance Ministers’ Meetings, begun in 2006, remain a valuable channel for sharing experiences and increasing mutual understanding, and they announced that the 11th meeting will be hosted in Korea within the next year.

Why this matters for the United States: Korea and Japan are major U.S. allies whose economic and financial coordination influences supply chains, technology policy, and regional stability. Agreement on energy security, AI investment, and supply-chain diversification affects global semiconductor and advanced-technology ecosystems. Moves to include Korean bonds in the WGBI can broaden access for international investors, potentially affecting global bond markets and capital flows. Currency and FX-market cooperation, alongside strengthened regional liquidity arrangements like the CMIM and currency swaps, have implications for market stability in Asia, with potential spillovers to U.S. markets and investment environments.