South Korea is pushing for a global currency swap scheme during the Group of 20 meetings as part of efforts to strengthen the financial safety net against global market turbulences, Seoul officials said Tuesday.

The global currency swap scheme is aimed at strengthening the financial safety net by allowing central banks of each nation to exchange their currencies with each other in case they face a possible liquidity crunch.

It was pushed by South Korea during last year’s G20 meetings, but the multilateral currency swap plan made little headway in the face of opposition from advanced nations, which worried that it could cause “moral hazard.”

“Ahead of the G20 summit to be held in France in November, we proposed discussing again the (global) currency swap scheme, which was proposed last year as a Korea initiative,” a high-ranking Finance Ministry official said on condition of anonymity.

“We took into account the latest global financial woes and stances of emerging countries.”

Seoul government officials said that France, Britain and Japan “in principle” favor strengthening the financial safety net itself, but many advanced economies still remain opposed to the currency swap proposal.

“It is still early to say if any immediate achievements can be made,” a separate ministry official said.

The proposal comes as G20 finance ministers will gather in Paris on Sept. 14-15 to fine-tune agendas to be discussed in the November summit talks.

The global financial markets are currently going through increased volatility as eurozone debt problems and the stagnate economic recovery in the U.S. raise concerns that the global economy could slip into a double-dip recession.

In 2008, when the financial crisis swept across the world, South Korea signed a bilateral $30 billion currency swap deal with the U.S., a move regarded as a major effort to help soothe fast-spreading worries over its possible liquidity crunch. 

(Yonhap News)