(2nd LD) Seoul to step up multilateral cooperation against credit crunch: Bahk

(ATTN: RECASTS currency figures in para 2)
By Lee Chi-dong
WASHINGTON, Sept. 22 (Yonhap) -- South Korean Finance Minister Bahk Jae-wan said Thursday that his government will focus on improving a global financial safety net, rather than seeking bilateral currency swaps with the United States, as a way to alleviate worries over a possible dollar shortage.
He said the South Korean economy, heavily dependent on exports and wide open to foreign capital markets, is vulnerable to external volatility. Its currency, the won, closed at 1,179.8 per dollar, the lowest level in a year, on Thursday, down 29.9 won.
Despite the surge in exchange rates, attributable to global market jitters, the minister made clear that Seoul has no plans to request another round of currency swap lines with Washington. In late 2008, when international investors were worried about a liquidity crunch in South Korea, the Bank of Korea signed a US$30-billion temporary currency swap deal with the Federal Reserve.
"Things (now) are different from then," Bahk said in a meeting with South Korean correspondents here. "We are not in such a serious condition to consider the measure (of currency swaps)." He is here to attend the annual meetings of the International Monetary Fund and the World Bank.
He cited a number of better conditions, including a continued current account surplus, lower unemployment rates, and increased foreign exchange reserves.
Bahk's comments came shortly before an one-on-one meeting with U.S. Treasury Secretary Timothy Geithner.
The minister said South Korea will step up efforts to bolster the function of the IMF as a global financial safety net and implement the Chiang Mai initiative, already in place, to arrange currency swaps regionally.
He added that the South Korean government will continue to take steps to tackle excessive swings in foreign exchange rates.
The size of South Korea's foreign exchange market is too small in comparison with its general economic size and the country's financial markets are wide open, he pointed out.
Bahk also said South Korea is not considering a new minimum tax for the wealthy like the so-called "Buffett rule."
U.S. President Barack Obama recently proposed a plan to raise taxes for high-income earners in a bid to reduce state debts. It is named after billionaire businessman Warren Buffett, who supports Obama's efforts to increase taxes on the wealthy.
"It is a kind of a special, temporary measure by a nation with a budget crisis," Bahk said, adding it has more symbolic than practical effect.
Bahk said his ministry is opposed to reducing taxes and import tariffs to cover hikes in oil prices.
"As high oil prices have become a long-time trend, it is more important to change the practice of using energy based on the function of prices," he said. He stressed the need for energy savings such as more use of public transportation and development of alternative energy sources.
lcd@yna.co.kr
leechidong@gmail.com
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