ID :
28230
Tue, 11/04/2008 - 09:33
Auther :
Shortlink :
https://www.oananews.org//node/28230
The shortlink copeid
S. Korea to guarantee foreign currency deposits
(ATTN: REWRITES lead; ADDS more details in paras 4, 12)
SEOUL, Nov. 3 (Yonhap) -- South Korea's financial watchdog said Monday it plans to extend state guarantees to foreign currency deposits if a financial institution goes bankrupt, in a move to help lenders secure dollar liquidity.
Currently, the government guarantees only Korean currency-denominated deposits of
50 million won (US$38,461) or below per individual. Guarantees for foreign
currency deposits will be capped at the same level.
"The government plans to provide such a guarantee for foreign currency deposits
as well," said an official at the Financial Services Commission (FSC). "As soon
as a related law is revised, the government plans to implement it."
As of the end of July, outstanding foreign currency deposits reached $37.5 billion.
South Korean lenders have been suffering from a dollar shortage in the wake of
the collapse of U.S. investment bank Lehman Brothers Holdings Inc. and the
subsequent credit crunch.
Last week, the Bank of Korea, the country's central bank, announced that it had
reached an agreement with the U.S. Federal Reserve on a $30 billion currency swap
aimed at thawing the frozen financial system here.
Meanwhile, the FSC said the watchdog is "very cautious" about suspending the
so-called "mark-to-market" accounting rules.
"Mark-to-market" is an accounting method of valuing securities or financial
instruments which a company holds at the current market prices each quarter.
As asset values have sharply declined in the aftermath of global financial
turmoil, companies have to book valuation losses even as they generate profits.
The United States, the European Union and Japan are mulling easing such rules.
"We plan to cautiously approach this issue by watching moves by other countries
because this is related to transparency for listed companies," Lim Seung-tae,
secretary general of the FSC, told reporters.
The watchdog also said it plans to iron out measures to help smaller companies
which are suffering from the slowing economy and a credit squeeze.
According to the plans, the government will invest a combined 1.3 trillion won in
three state-run lenders -- Korea Development Bank, the Export-Import Bank of
Korea, and the Industrial Bank of Korea -- in a bid to raise the banks' lending
capacity for smaller companies and exporters.
In early October, the FSC said the government will extend liquidity of about 4.3
trillion won to smaller firms which have faced cash shortages and losses related
to currency option contracts.
sooyeon@yna.co.kr
(END)
SEOUL, Nov. 3 (Yonhap) -- South Korea's financial watchdog said Monday it plans to extend state guarantees to foreign currency deposits if a financial institution goes bankrupt, in a move to help lenders secure dollar liquidity.
Currently, the government guarantees only Korean currency-denominated deposits of
50 million won (US$38,461) or below per individual. Guarantees for foreign
currency deposits will be capped at the same level.
"The government plans to provide such a guarantee for foreign currency deposits
as well," said an official at the Financial Services Commission (FSC). "As soon
as a related law is revised, the government plans to implement it."
As of the end of July, outstanding foreign currency deposits reached $37.5 billion.
South Korean lenders have been suffering from a dollar shortage in the wake of
the collapse of U.S. investment bank Lehman Brothers Holdings Inc. and the
subsequent credit crunch.
Last week, the Bank of Korea, the country's central bank, announced that it had
reached an agreement with the U.S. Federal Reserve on a $30 billion currency swap
aimed at thawing the frozen financial system here.
Meanwhile, the FSC said the watchdog is "very cautious" about suspending the
so-called "mark-to-market" accounting rules.
"Mark-to-market" is an accounting method of valuing securities or financial
instruments which a company holds at the current market prices each quarter.
As asset values have sharply declined in the aftermath of global financial
turmoil, companies have to book valuation losses even as they generate profits.
The United States, the European Union and Japan are mulling easing such rules.
"We plan to cautiously approach this issue by watching moves by other countries
because this is related to transparency for listed companies," Lim Seung-tae,
secretary general of the FSC, told reporters.
The watchdog also said it plans to iron out measures to help smaller companies
which are suffering from the slowing economy and a credit squeeze.
According to the plans, the government will invest a combined 1.3 trillion won in
three state-run lenders -- Korea Development Bank, the Export-Import Bank of
Korea, and the Industrial Bank of Korea -- in a bid to raise the banks' lending
capacity for smaller companies and exporters.
In early October, the FSC said the government will extend liquidity of about 4.3
trillion won to smaller firms which have faced cash shortages and losses related
to currency option contracts.
sooyeon@yna.co.kr
(END)
