S. Korea unlikely to face another financial crisis: Rubin

SEOUL, Feb. 23 (Yonhap) -- South Korea is unlikely to face another financial
crisis similar to the one a decade ago as the country's economic fundamentals are
sound, a former U.S. treasury secretary said Monday.

"I think that at least the probability of something we experience in 1998 is way
too low," Robert Rubin told in a press conference here after attending an
international forum. "Fundamentally, there are differences in circumstances."
Rubin served as the U.S. Treasury Secretary during the Clinton administration. He
held a temporary position as Chairman of Citigroup Inc. from November to December
2007 and before his government service spent 26 years at Goldman Sachs.
He pointed out that during the previous financial crisis South Korea had a fixed
exchange rate and a foreign reserve situation that was not transparent. "You
don't have lack of transparency today," Rubin said.
He also said President Barack Obama's economic team would make a sensible
decision as to the possibility of further expanding a currency swap between South
Korea and the United States.
"In terms of raising the limit, I am not in a policy position today and its not
my job to make decisions," Rubin said. "I have no doubt that they will make a
sensible decision."
Earlier this month, the U.S. Federal Reserve extended a credit line with South
Korea by six months to the end of October to supply the country with dollars as
part of efforts to fight the global credit crunch.
The agreement, first announced in late October of last year, gave the Bank of
Korea access to up to US$30 billion through the end of April 2009.
The Bank of Korea has been drawing on the funds to provide loans to banks through
competitive auctions. South Korean banks have had difficulty acquiring dollars
since the global financial crisis froze credit markets.
Rubin said South Korea needs to tackle such issues as the won's sharp slide and
the ongoing credit squeeze, but he stressed that any measures taken should not go
towards boosting inflation or other unwanted side effects.
He also said the current crisis calls for a concerted global effort to address
the difficulties in the financial system, including urging financial institutions
to open up their credit lines.
Rubin noted that the relationship between the economies of Asia and the U.S.
would be critical in repairing the damage to the global financial framework,
specifically in terms of trade, capital flows and financial architecture reform.
"This engagement between Asia and the U.S. may occur through reformed global
institutions, or through special regional processes," he said. "In either case,
Korea, with its long history of effective domestic policy leadership and as a
major global economy, should be strongly engaged in all of this activity."
sam@yna.co.kr
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