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Banks may face difficulty in raising long-term FX liquidity: bank heads
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The heads of South Korean banks expressed concerns Friday that the current
turmoil in the global financial market may lead to difficulties in securing mid-
and long-term overseas borrowing, the central bank said.
The Bank of Korea (BOK) quoted 10 chiefs of local banks as saying that local banks have secured a large bulk of foreign exchange liquidity in advance in an attempt to fend off a potential liquidity squeeze.
However, lingering concerns about the global financial markets may make it difficult for them to raise foreign borrowing in the mid-and long term, such as from bond sales.
The remarks came when BOK governor Kim Choong-soo met with local bank heads in a monthly meeting.
The global economic slowdown and the eurozone debt crisis are increasing volatility of global financial markets, prompting local banks to scurry to secure FX liquidity.
South Korea learned a painful lesson about the importance of strengthening banks' foreign currency liquidity after experiencing the 1997-98 Asia-wide financial crisis and the global financial tumult that accompanied it.
At the height of the global financial storm, Korean banks, saddled with high short-term external debt, had difficulties in refinancing foreign currency loans or securing FX liquidity as foreign capital fled the country en masse.
Date
2011.10.21
The Bank of Korea (BOK) quoted 10 chiefs of local banks as saying that local banks have secured a large bulk of foreign exchange liquidity in advance in an attempt to fend off a potential liquidity squeeze.
However, lingering concerns about the global financial markets may make it difficult for them to raise foreign borrowing in the mid-and long term, such as from bond sales.
The remarks came when BOK governor Kim Choong-soo met with local bank heads in a monthly meeting.
The global economic slowdown and the eurozone debt crisis are increasing volatility of global financial markets, prompting local banks to scurry to secure FX liquidity.
South Korea learned a painful lesson about the importance of strengthening banks' foreign currency liquidity after experiencing the 1997-98 Asia-wide financial crisis and the global financial tumult that accompanied it.
At the height of the global financial storm, Korean banks, saddled with high short-term external debt, had difficulties in refinancing foreign currency loans or securing FX liquidity as foreign capital fled the country en masse.
Source: Yonhap News (Oct. 21, 2011)