ID :
25508
Mon, 10/20/2008 - 09:20
Auther :
Shortlink :
https://www.oananews.org//node/25508
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(EDITORIAL from the Korea Herald on Oct. 20)
Putting end to panic
In the latest bid to stabilize the financial market, the government announced
yesterday a package of measures, including foreign currency payment guarantees for
domestic banks worth $100 billion won.
As part of the plan, the government will guarantee the payment of all external debts
by Korean banks until June 2009 for a period of three years.
To improve the country's dollar liquidity, the government will also provide $30
billion to the banking sector.
The Ministry of Strategy and Finance, in a joint statement with the Financial
Services Commission and the Bank of Korea, sought to assure the market that despite
the recent credit crisis, the real economy and financial sector are sound. Exports
show steady growth trends and conditions of the banking sector remain healthy, it
said.
"The government's move to guarantee external debts by Korean banks is in step with
measures taken by many other countries. As other major economies start providing
guarantees for inter-bank loans, the Korean government will take similar measures to
avoid placing domestic banks at a comparative disadvantage and to allay fears in the
financial sector," the statement said.
Sunday's announcement follows an earlier remark by Finance Minister Kang Man-soo
that the government will assemble financial market stabilization policies in a
"preemptive, decisive and sufficient manner."
Other measures in the package include the Bank of Korea buying repurchase agreements
and government bonds and early redemption of monetary stabilization bonds, all aimed
at easing the Korean currency liquidity crunch.
The government will also inject an equivalent of 1 trillion won into the Industrial
Bank of Korea, which will be expected to provide additional loans worth 12 trillion
won to assist small- and medium-sized companies.
The government will know today when the stock exchange opens for Monday morning
trading whether its announced measures were sufficient to augment market confidence.
Analysts predict the measures will have a positive impact on the market.
The government's current economic team has been a reason for the market's loss of
confidence. With the Finance Ministry and the central bank constantly at odds over
policies, it was inevitable that the market did not respond warmly to previous
piecemeal attempts to stabilize the financial market in the way the government had
hoped.
Hopefully the latest package will have its intended effect. Although there are some
anxieties among Koreans that the country may experience a repeat of the 1997
financial crisis, financial institutions today are healthier and the foreign
reserves of about $240 billion is far larger than what the country had in 1997.
While there is a need for clear-headed policies to weather the current financial
market turmoil, there is no need to panic and exacerbate the problem.
(END)
In the latest bid to stabilize the financial market, the government announced
yesterday a package of measures, including foreign currency payment guarantees for
domestic banks worth $100 billion won.
As part of the plan, the government will guarantee the payment of all external debts
by Korean banks until June 2009 for a period of three years.
To improve the country's dollar liquidity, the government will also provide $30
billion to the banking sector.
The Ministry of Strategy and Finance, in a joint statement with the Financial
Services Commission and the Bank of Korea, sought to assure the market that despite
the recent credit crisis, the real economy and financial sector are sound. Exports
show steady growth trends and conditions of the banking sector remain healthy, it
said.
"The government's move to guarantee external debts by Korean banks is in step with
measures taken by many other countries. As other major economies start providing
guarantees for inter-bank loans, the Korean government will take similar measures to
avoid placing domestic banks at a comparative disadvantage and to allay fears in the
financial sector," the statement said.
Sunday's announcement follows an earlier remark by Finance Minister Kang Man-soo
that the government will assemble financial market stabilization policies in a
"preemptive, decisive and sufficient manner."
Other measures in the package include the Bank of Korea buying repurchase agreements
and government bonds and early redemption of monetary stabilization bonds, all aimed
at easing the Korean currency liquidity crunch.
The government will also inject an equivalent of 1 trillion won into the Industrial
Bank of Korea, which will be expected to provide additional loans worth 12 trillion
won to assist small- and medium-sized companies.
The government will know today when the stock exchange opens for Monday morning
trading whether its announced measures were sufficient to augment market confidence.
Analysts predict the measures will have a positive impact on the market.
The government's current economic team has been a reason for the market's loss of
confidence. With the Finance Ministry and the central bank constantly at odds over
policies, it was inevitable that the market did not respond warmly to previous
piecemeal attempts to stabilize the financial market in the way the government had
hoped.
Hopefully the latest package will have its intended effect. Although there are some
anxieties among Koreans that the country may experience a repeat of the 1997
financial crisis, financial institutions today are healthier and the foreign
reserves of about $240 billion is far larger than what the country had in 1997.
While there is a need for clear-headed policies to weather the current financial
market turmoil, there is no need to panic and exacerbate the problem.
(END)
