Banks from China, South Korea and Japan inked an accord on Monday on foreign exchange co-operation.

The accord, signed by the Bank of China, the Korea Exchange Bank (KEB) and Japan's Sumitomo Mitsui Banking Corp, is the first of its kind in the banking history of the three East Asian neighbours.

The agreement will facilitate co-operation in the specific field of settlement systems and network channels.

After the signing, for example, the KEB can make use of Sumitomo Mitsui's networks in Japan to assist its transaction in Japan.

And the three also agreed to work out comprehensive financial solutions to ease cross-border investment and project financing.

The signing signals the progress of the three countries' financial co-operation from a wording commitment at the governmental level to a deeper level of detailed implementation by the banks.

A crucial part of financial co-operation between China, South Korea and Japan, the trilateral banking arrangement will give an impetus to the regional economic integration of the three countries.

And the move accords with current world trend.

In a globalized era, economic co-operation has become increasingly important as world economies try to lower costs of economic development and achieve a common prosperity.

The ongoing discussion on co-operation between the Association of Southeast Asian Nations and China, South Korea and Japan reflects these countries' faith in this world trend.

However, compared to the European and American market situation, East Asian countries had not achieved much in regional economic co-operation until in recent years when they accelerated talks on co-operative arrangements.

For example, the trade volume between China, South Korea and Japan, the three major players of the region, in 2001 accounted for only 19.8 per cent of their overall trade volume, while in the European Union and the North American free trade zones the proportion was 66 and 46 per cent, respectively.

The signing of the accord in the sensitive banking sector shows an enhanced confidence among the three neighbours. We hope it will catalyze progress in other areas of free trade arrangements among the three countries.