South Korea’s financial authorities announced yesterday measures to help stabilize the country’s currency and financial system and limit damage to the broader economy during times of financial volatility such as the 2008 global crisis.
South Korea has suffered when international capital flows suddenly reverse during periods of turmoil, such as the 1997 to 1998 Asian economic crisis and the 2008 meltdown, when investors take out their money and flee to assets — often US dollar-denominated — perceived as safer.
In both cases, South Korea saw capital rush out of the country.
That caused the won to plunge and strongly crimped the ability of local banks and corporations with foreign currency loans to secure dollars to pay them back.
The announced measures, which include limits on how much capital can be used in foreign exchange derivatives trading for both domestic and foreign banks, are meant to “curb excessive volatility of capital flows,” the South Korean Ministry of Strategy and Finance, the Bank of Korea and the country’s financial regulators said.
“The past two financial crises highlighted the need for dealing with volatile capital flows,” the government said. “Excessive capital inflows during boom periods and sudden outflows in times of bust created a severe financial crisis.”
Foreign bank branches in South Korea will be limited to investing 250 percent of their previous month’s capital in foreign exchange derivatives contracts, down from the current approximately 300 percent. The limit for domestic banks will be 50 percent. The previous amount was not provided.
The new measures will be implemented from the middle of next month and be accompanied by a three-month grace period, authorities said.
The new measures also include reinforced rules on bank loans taken out in foreign currencies and strengthening the monitoring of capital flows.
South Korea, which is the chair this year of the powerful G20 leading economies, has taken the lead on calling for the creation of financial safety nets to protect countries that are buffeted by international capital flows.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS