South Korea and Japan agreed Wednesday to expand their currency swap arrangement to 70 billion U.S. dollars from 13 billion dollars. According to an e-mailed statement sent by the Bank of Korea (BOK), the central bank reached an agreement with the Bank of Japan (BOJ) on an increase in the maximum of the bilateral won-yen swap from 3 billion dollars to 30 billion dollars. The increase will be effective until the end of October 2012. The BOK said in a separate statement released jointly by the Ministry of Strategy and Finance that the central bank expanded its won-dollar swap arrangement with Japan\'s finance ministry to 40 billion dollars from 10 billion dollars. The swap line will take effect by the end of October next year. Under the agreement, Japan would provide South Korea with 30 billion dollars in the Japanese yen as well as with 40 billion dollars in the greenback in exchange for receiving 70 billion dollars in the South Korean won. WON-YEN SWAP The won-yen swap arrangement for non-crisis period had been made effective since May 2005 in a bid to stabilize regional financial markets through supply of short-term liquidity, but the swap line was widened to the 30 billion-dollar level amid growing external uncertainties caused by Europe\'s debt crisis and delayed economic recovery in advanced nations. \"It would take a very long time for the European fiscal crisis to be resolved. Such worries boosted market volatility and uncertainty. South Korea and Japan will secure financial stability in the region as well as in the two nations through the swap line expansion,\" vice finance minister Shin Je-yoon told reporters at a joint news conference with senior BOK deputy governor Lee Ju- yeol. \"The action will mitigate adverse influences of heightened uncertainty in the global market on the two sound and well-managed economies and contribute to enhance stability in regional financial markets,\" the BOK said. At the height of the 2008 global financial crisis, the won- yen swap line was expanded to 20 billion dollars, but the 17 billon-dollar swap line was closed last year after the global financial markets showed signs of stabilizing. The remaining 3 billion-dollar line was scheduled to expire on July 3, 2013. WON-DOLLAR SWAP The won-dollar swap arrangement worth 10 billion dollars, which can be tapped in the event of emergency, had been made effective through Chiang Mai Initiative (CMI), or a regional currency swap agreement. The CMI was reached in May 2000 between China, Japan, South Korea and the Association of Southeast Asian Nations (ASEAN) in a bid to prevent the outbreak of the region\'s foreign exchange crisis. The won-dollar swap line between South Korea and Japan grew to 40 billion dollars after South Korean President Lee Myung-bak held summit talks with his Japanese counterpart Yoshihiko Noda. The two head of states shared views that the two nations need to strengthen financial cooperation amid deepening uncertainties over the global economy. \"The two nations agreed to expand bilateral currency swap to a total of 70 billion dollars sufficient for mutual benefits and financial stability,\" Shin said, adding that it would enhance the country\'s sovereign credit condition along with 26 billion dollars worth of swap line with China and foreign reserves amounting to more than 300 billion dollars.