BEIJING, Dec 12 (Reuters) - The People's Bank of China announced the establishment of a bilateral currency swap arrangement with the Bank of Korea and said it is exploring possible deals with other central banks.
"When the time comes, we will actively study the possibility of currency swaps with other central banks (monetary authorities), so as to safeguard regional and global financial stability," the PBOC said on Friday.
The swap deal with South Korea will support the provision of liquidity in amounts of up to 180 billion yuan/38 trillion won, the central bank said on its website.
"This arrangement is designed to help improve short-term liquidity conditions in the financial systems of the two fundamentally sound and well managed economies and to promote the bilateral trade.
"This swap facility will be established in addition to the existing arrangements under the Chiang Mai Initiative," it said.
The statement added: "The two central banks have agreed to explore the possibility and extent of converting swap currencies into reserve currencies. "The effective period of the facility will be 3 years, and could be extended by agreement between the two sides." (Reporting by Jason Subler; Writing by Alan Wheatley)