Finance, Forex and Investments

Larger FX reserves needed BOK

Summary: The Bank of Korea is set to emphasize tomorrow that country s level of foreign reserves is still inadequate and will call for the creation of a global safety net to fall back on during future economic meltdowns Kim Choong soo the governor of the central bank plans to outline those views in a speech at a two day conference celebrating the BOK s 60th anniversary according to the text of the address which was released yesterday The theme of the conference is the changing role of central banks Prior to the recent crisis there was even criticism that the volume of foreign exchange reserves in emerging market economies and especially in Asia were excessive the text says However the crisis has proven such criticism of our so called excessive reserve holdings to have been invalid as reserves were in many cases still not sufficient for ensuring foreign currency liquidity The governor wrote that the recent global economic crisis including the sovereign debt problems in Europe has highlighted the fact that emerging markets are vulnerable to severe exchange rate volatility To help navigate through the challenges Korea and other nations have relied on the accumulation of foreign reserves in case companies and individuals overseas pull money out of the local market en masse according to the text of the speech Korea s foreign reserve as of April this year is at $278 8 billion a record high As of March Korea had the sixth largest level of foreign reserves behind just China Japan Russia Taiwan and India But the BOK believes Korea should still increase its holdings Kim will also urge cooperation among central banks across the world encouraging them to extend currency swaps in order to establish a safety net against a possible foreign liquidity crunch during economic downturns By Lee Ho jeong ojlee82 joongang co kr Copyrights ⓒ JoongangIlbo Joins com All rights reserved The Bank of Korea is set to emphasize tomorrow that country s level of foreign reserves is still inadequate and will call for the creation of a global safety net to fall back on during future economic meltdowns Kim Choong soo the governor of the central bank plans to outline those views in a speech at a two day conference celebrating the BOK s 60th anniversary according to the text of the address which was released yesterday The theme of the conference is the changing role of central banks Prior to the recent crisis there was even criticism that the volume of foreign exchange reserves in emerging market economies and especially in Asia were excessive the text says However the crisis has proven such criticism of our so called excessive reserve holdings to have been invalid as reserves were in many cases still not sufficient for ensuring foreign currency liquidity The governor wrote that the recent global economic crisis including the sovereign debt problems in Europe has highlighted the fact that emerging markets are vulnerable to severe exchange rate volatility To help navigate through the challenges Korea and other nations have relied on the accumulation of foreign reserves in case companies and individuals overseas pull money out of the local market en masse according to the text of the speech Korea s foreign reserve as of April this year is at $278 8 billion a record high As of March Korea had the sixth largest level of foreign reserves behind just China Japan Russia Taiwan and India But the BOK believes Korea should still increase its holdings Kim will also urge cooperation among central banks across the world encouraging them to extend currency swaps in order to establish a safety net against a possible foreign liquidity crunch during economic downturns By Lee Ho jeong ojlee82 joongang co kr Copyrights ⓒ JoongangIlbo Joins com All rights reserved

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