State lenders told to shore up liquidityKorea plans to set up a second line of defense for its foreign currency liquidity by prompting local state-run lenders to secure more such liquidity and brace for the future fallout of the euro zone debt crisis, an official said yesterday.
The move comes as the worsening situation in Europe may make it difficult for local banks to acquire enough foreign currency.
“Since late last year, the country’s four state-run lenders have scurried to secure FX liquidity,” said an official at the Financial Services Commission. The four banks cited are the Export-Import Bank of Korea, Korea Development Bank, the Industrial Bank of Korea and policy lender Korea Finance.
Local commercial banks are estimated to have secured around $27 billion since the second half of last year, and the government said it will prompt the four state-run agencies to obtain about $8 billion in FX liquidity.
At the height of the 2008 global financial meltdown, Korean banks had difficulties refinancing foreign currency loans or securing FX liquidity, as foreign capital fled the country en masse. Yonhap
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