ID :
57103
Thu, 04/23/2009 - 17:43
Auther :
Shortlink :
https://www.oananews.org//node/57103
The shortlink copeid
Total liquidity in financial system not high: BOK head
SEOUL, April 23 (Yonhap) -- South Korea's top central banker said Thursday
liquidity in the financial system cannot be seen as excessively high because the
growth pace of the money supply is slowing.
"The amount of money supplied by the Bank of Korea (BOK) is large, but total
liquidity cannot be viewed as high," BOK Gov. Lee Seong-tae told lawmakers.
Despite a series of rate cuts by the BOK, money is not fully flowing in the
financial system as credit risks for marginalized companies linger. The central
bank has made six consecutive rate reductions totaling 3.25 percentage points to
a record low of 2 percent in February.
The country's liquidity aggregate reached 2,331.9 trillion won (US$1.73 trillion)
as of the end of February, up 10.8 percent from a year earlier and moderating
from a 10.9 percent gain the previous month, according to the BOK.
Some have cautioned that there is ample short-term liquidity, part of which has
been flowing into the country's stock and real estate markets.
It is feared that excessive liquidity may spark inflation if the Korean economy
begins to regain its momentum for recovery. But policymakers at the BOK said that
it is too early to talk about absorbing liquidity it pumped into the system
because economic uncertainty still persists.
Meanwhile, Gov. Lee said the BOK needs the right to investigate practices of
local banks, adding that this authority is necessary for the BOK to collect
information in a timely manner in managing its monetary policy.
"The authority does not mean the right to supervise financial firms," Lee said.
His remarks come as lawmakers are in discussions to revise the country's central
bank laws to better cope with financial and economic instability.
The laws regulating the BOK were revised in 1998, making price stability the
central bank's top priority and giving its right to supervise local banks to the
Financial Supervisory Service, the financial watchdog.
But in the aftermath of the global financial meltdown, there have been calls to
revise the law so as to strengthen the BOK's role in stabilizing the financial
market and staving off an economic recession.
Critics say the central bank's current main goal is hampering efforts to deal
with the ongoing financial market jitters and the economic slowdown.
But the finance ministry currently opposes giving the authority to investigate
practices of banks to the BOK, saying the current supervisory system is not
seriously flawed when it comes to dealing with financial turmoil.
sooyeon@yna.co.kr
(END)
liquidity in the financial system cannot be seen as excessively high because the
growth pace of the money supply is slowing.
"The amount of money supplied by the Bank of Korea (BOK) is large, but total
liquidity cannot be viewed as high," BOK Gov. Lee Seong-tae told lawmakers.
Despite a series of rate cuts by the BOK, money is not fully flowing in the
financial system as credit risks for marginalized companies linger. The central
bank has made six consecutive rate reductions totaling 3.25 percentage points to
a record low of 2 percent in February.
The country's liquidity aggregate reached 2,331.9 trillion won (US$1.73 trillion)
as of the end of February, up 10.8 percent from a year earlier and moderating
from a 10.9 percent gain the previous month, according to the BOK.
Some have cautioned that there is ample short-term liquidity, part of which has
been flowing into the country's stock and real estate markets.
It is feared that excessive liquidity may spark inflation if the Korean economy
begins to regain its momentum for recovery. But policymakers at the BOK said that
it is too early to talk about absorbing liquidity it pumped into the system
because economic uncertainty still persists.
Meanwhile, Gov. Lee said the BOK needs the right to investigate practices of
local banks, adding that this authority is necessary for the BOK to collect
information in a timely manner in managing its monetary policy.
"The authority does not mean the right to supervise financial firms," Lee said.
His remarks come as lawmakers are in discussions to revise the country's central
bank laws to better cope with financial and economic instability.
The laws regulating the BOK were revised in 1998, making price stability the
central bank's top priority and giving its right to supervise local banks to the
Financial Supervisory Service, the financial watchdog.
But in the aftermath of the global financial meltdown, there have been calls to
revise the law so as to strengthen the BOK's role in stabilizing the financial
market and staving off an economic recession.
Critics say the central bank's current main goal is hampering efforts to deal
with the ongoing financial market jitters and the economic slowdown.
But the finance ministry currently opposes giving the authority to investigate
practices of banks to the BOK, saying the current supervisory system is not
seriously flawed when it comes to dealing with financial turmoil.
sooyeon@yna.co.kr
(END)
