ID :
196789
Sun, 07/24/2011 - 06:17
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https://oananews.org//node/196789
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Financial watchdogs, banks discuss foreign capital liquidity issue
SEOUL, July 24 (Yonhap) -- South Korea's financial watchdogs recently formed a task force with local banks to intensify their monitoring of foreign capital liquidity situations in the financial sector amid growing fiscal woes in Europe, government sources said Sunday.
The task force, which consists of the Financial Services Commission (FSC), the Financial Supervisory Service (FSS) and 12 local banks, held its first meeting on Friday, according to the sources.
During the meeting, the task force called in bank executives in charge of finance and asked them to review their overall foreign capital liquidity situations more closely and better prepare for any future turbulence, the sources said.
"Concerns are growing over Europe's fiscal debt problems and many lingering risk factors confronting major advanced nations, including deepening unemployment in the U.S.," an FSC official said on the condition of anonymity.
"We have formed the task force on worries that foreign capital, in particular, European capital, could leave the country at any time in droves."
The official noted that the financial crisis that South Korea has suffered from the most started in the foreign currency sector, saying that the meeting is part of "precautionary efforts" to brace for the worst.
He, however, added that there are "fewer chances" that the current situation could develop into a full-fledged crisis.
During the meeting, sources said that the FSC and the FSS, the nation's financial watchdogs, asked local banks to apply strengthened standards in their "stress tests" on the foreign capital liquidity situations, while finding more stable overseas borrowing channels.
"There was a mention that we have to remain alert as there are uncertainties over how the fiscal crisis in Europe could unfold," a bank official, who attended the meeting, said on condition of anonymity.
The meeting comes as the government has been paying close attention to sharply growing short-term foreign debt held by local financial institutions amid worries that an abrupt exodus of foreign capital could cripple the nation's financial stability.
South Korea has suffered from financial crises twice over the past decade, mostly caused by an exodus of foreign capital, which sent the nation's financial system into chaos despite overall sound economic fundamentals.
The task force, which consists of the Financial Services Commission (FSC), the Financial Supervisory Service (FSS) and 12 local banks, held its first meeting on Friday, according to the sources.
During the meeting, the task force called in bank executives in charge of finance and asked them to review their overall foreign capital liquidity situations more closely and better prepare for any future turbulence, the sources said.
"Concerns are growing over Europe's fiscal debt problems and many lingering risk factors confronting major advanced nations, including deepening unemployment in the U.S.," an FSC official said on the condition of anonymity.
"We have formed the task force on worries that foreign capital, in particular, European capital, could leave the country at any time in droves."
The official noted that the financial crisis that South Korea has suffered from the most started in the foreign currency sector, saying that the meeting is part of "precautionary efforts" to brace for the worst.
He, however, added that there are "fewer chances" that the current situation could develop into a full-fledged crisis.
During the meeting, sources said that the FSC and the FSS, the nation's financial watchdogs, asked local banks to apply strengthened standards in their "stress tests" on the foreign capital liquidity situations, while finding more stable overseas borrowing channels.
"There was a mention that we have to remain alert as there are uncertainties over how the fiscal crisis in Europe could unfold," a bank official, who attended the meeting, said on condition of anonymity.
The meeting comes as the government has been paying close attention to sharply growing short-term foreign debt held by local financial institutions amid worries that an abrupt exodus of foreign capital could cripple the nation's financial stability.
South Korea has suffered from financial crises twice over the past decade, mostly caused by an exodus of foreign capital, which sent the nation's financial system into chaos despite overall sound economic fundamentals.
