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[Viewpoint] It’s now up to Korea to act

One year has passed since the global financial crisis enveloped the world, and the international community is now focused on two questions. First, when will we finally escape from the brutal economic recession?

The second question is even more important: How can countries create international financial regulations and a monitoring system that can prevent a recurrence of such a crisis?

The first question is of wide interest to ordinary people, but it is a transient issue. As of now, the world economy feels relieved that the worst was avoided, though a complete recovery is expected to take some time.

The second issue is of lesser interest to the man on the street, but it is crucial to what will happen to the global economy in the future, because the establishment of new international financial regulations and a monitoring system will do nothing less than redefine the world economic order.

Korea is buoyed by its hosting of the Group of 20 summit in November of next year, but the event itself is actually a secondary issue. The country is discussing ways to improve the national status to become a truly advanced nation, but those ways are far from the essence of the G-20 summit.

The G-20 summit was initiated to counter the global financial crisis, and the top priority of the participating world leaders is creating measures to prevent the recurrence of the crisis.

It is important for Korea to host the event smoothly, but its dream of becoming a truly advanced nation will never be realized unless it plays a leading role in creating these crisis prevention measures.

If critical decisions are made by the original Group of Seven nations at the upcoming summit, with Korea playing little more than that of a friendly host, it will be extremely disappointing. Unfortunately, advanced nations are actually in charge of the selection of the agenda and the steering of the G-20 summit.

There are two processes currently ongoing to create the post-crisis measures. The first, being prepared by the Financial Stability Board of the G-20, is a plan to reinforce the monitoring of international financial soundness. Another is the International Monetary Fund’s global liquidity management system. The two issues will become the basic framework of the new global economic order.

What will be presented at the next year’s G-20 summit are the crisis preventive measures currently being discussed at the FSB and IMF.

In order for Korea to be treated as an advanced nation, Korea must expand its role in the discussions at the FSB and IMF.

To use next year’s G-20 summit as an opportunity to gain the international community’s respect, Korea must make more efforts behind the scenes, rather than focusing on what will be on the surface.

Fortunately, Korea’s voice has been increasingly heard at the FSB and IMF because of its scheduled hosting of the G-20 summit.

The Korean government has argued that the international community must develop measures through which emerging economies will be shielded from financial calamity by securing foreign currency liquidity and improving monitoring of the soundness of their foreign currency markets. The proposal was reflected in the FSB’s official agenda. Furthermore, Finance Minister Yoon Jeung-hyun’s recent argument made at the International Monetary and Financial Committee in Istanbul, Turkey, largely won support.

Yoon said a global safety net, such as bilateral currency swaps and regional currency cooperation to protect emerging economies from outside shocks, should be built and the IMF’s support capabilities should be increased.

Based on such improved situations, Korea faces a task of actually improving its position in the international organizations. Korea needs to receive as big a stake as possible when the IMF reassigns quota shares by 2011. Furthermore, efforts are necessary to promote more Koreans into higher positions at the IMF.

At the FSB, Korea also needs to play a leading role to make the organization a permanent body and raise the nation’s voice when agendas are selected.

If the FBS becomes a permanent body, Korea must actively work to host its headquarters. If the FSB headquarters will be established in Korea, the nation’s position in the international economic stage will be dramatically heightened.

Furthermore, it will serve as the best opportunity for Korea to become an international financial hub.

*The writer is an editorial writer of the JoongAng Ilbo.
Translation by the JoongAng Daily staff.

by Kim Jong-soo