South Korea, Japan Pledge Deeper Financial Cooperation in Tokyo Amid Middle East Turmoil

In Tokyo, South Korea’s Deputy Prime Minister and Finance Minister Koo Yun-cheol and Japan’s Finance Minister Satsuki Katayama presided over the 10th Korea-Japan Finance Ministers’ Meeting at the Japanese Ministry of Finance. The talks, the first since President Lee Jae-myung took office, focused on global and regional economic conditions and ways to deepen bilateral and multilateral cooperation amid heightened external volatility linked to the Middle East conflict.

Participants stressed the need for close coordination to ensure stable energy supplies and highlighted the potential to boost investment in artificial intelligence to support economic growth. They also discussed mitigating the impact of the Middle East turmoil on financial markets and macro-financial stability.

Both sides voiced serious concerns about the sharp declines in the won and the yen and agreed to monitor foreign exchange markets closely, taking appropriate measures to prevent excessive volatility or disorderly movements.

The ministers agreed to promote diversification of essential mineral supply chains and to cooperate on supply-chain policy. They reaffirmed their commitment to strengthening the Chiang Mai Initiative Multilateralisation (CMIM), the regional framework for currency-swaps and financial safety nets within ASEAN+3.

They also pledged continued cooperation in multilateral forums, including the G20 and G7. Korea has been invited to G7 finance ministers and central bank governors meetings for three consecutive years, beginning with Japan’s invitation in 2023.

On customs cooperation, the two economies planned to coordinate more closely, with a Korea-Japan customs chiefs meeting slated to be held in Korea in April.

Katayama welcomed Korea’s forthcoming inclusion in the World Government Bond Index (WGBI) next month and its outreach to international investors in advance of that inclusion. The ministers reiterated the importance of bilateral financial cooperation, including currency swaps, and agreed to pursue further improvements to regional financial safety nets.

Security concerns were also on the agenda, with both sides noting that illicit North Korean cryptocurrency activity and the use of IT personnel could support weapons programs, posing broader international security risks. They agreed to maintain regular deputy-level meetings, staff exchanges, and ongoing policy-research collaboration among think tanks.

This gathering marked the first Korea-Japan finance ministers’ meeting since President Lee Jae-myung’s inauguration, and the two countries planned to hold the 11th meeting within a year in Korea.