No time to sit back

Stock prices in Korea are plunging. The Kospi has fallen below the psychologically important 1,000 barrier, and the won-dollar exchange rate is skyrocketing daily. The government’s emergency contingency plans don’t seem to be working at all. In fact, financial markets around the globe are in chaos.

Until the credit crunch in the United States - where the financial crisis started - is resolved, it will be difficult to escape from the vicious circle of falling stock prices and soaring exchange rates.

If the liquidity crunch at foreign financial institutes and funds is not resolved, there is no way to stop foreign investors from selling off Korean stocks, which drives up the exchange rate as a result.

But we can’t simply sit back and watch, doing nothing. The government must prepare measures that work and make efforts through international cooperation to help overcome the crisis soon as possible. We must get rid of the causes of the crisis.

In the Asia-European Meeting held in Beijing, the leaders of Korea, China, Japan and members of the Association of Southeast Asian Nations agreed to form a joint Asian fund of $80 billion by the first half of next year in response to the financial crisis. This is good news indeed, although belated. The leaders also agreed to expand currency swaps in case another financial crisis breaks out.

If Korea signs currency swap agreements with China and Japan, the deals will be very helpful in calming down insecurities in the financial markets.

It is time for China and Japan to exert leadership in getting rid of financial insecurities in the region. The Korean administration must work full-scale using all diplomatic channels in order to carry out measures to expand the currency swap initiative.

It also must take advantage of the G-20 meeting scheduled for Nov. 15, which will seek to establish international cooperation to handle the financial crisis.

Korea should not merely do what the United States asks. Instead, it should emphasize that both advanced economies and emerging markets must cooperate to resolve the global financial crisis in its early stage.

Korea also should demand that advanced countries including the U.S. take responsibility and perform all their duties to resolve the crisis.

If international cooperation is as firm as the G-20 meeting, the crisis that we are facing now can be overcome without much difficulty.