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Bloomberg, 29 September 2011:
*Korea Urges Banks to Boost Liquidity as Europe Debt Storm Brews*

South Korea urged its banks to boost foreign-currency liquidity amid concern
they remain vulnerable to the financial storm brewing in Europe, even after
more than a decade of reform following an international bailout.
Lenders need to look beyond the U.S. and Europe and diversify their funding
into emerging markets such as the Middle East to prepare for a global
crisis, Financial Services Commission Chairman Kim Seok Dong told chief
executive officers of firms including Kookmin Bank and Woori Bank in Seoul
today.

A 9 percent slump in South Korea’s won in the past month and signs of
tightening in global credit markets dictates that banks continue shoring up
defenses, according to Kim.

“Banks need to secure enough foreign-funding liquidity to avoid a vicious
cycle of relying on support from the government or central bank in times of
crisis,” Kim said. “We need to be prepared for a situation where external
instability lasts for a considerable period,” he said, adding that lenders’
current holdings of easy-to-sell foreign-currency assets are sound.

Regulators are mindful that the International Monetary Fund led a $57
billion bailout during the Asian currency crisis, and that banks’
foreign-currency capital dwindled and the won plunged during the global
credit freeze of 2008. Moody’s Investors Service says that Korean banks
remain vulnerable because of their dependence on financing from abroad.

http://www.bloomberg.com/news/2011-09-28/s-korea-fsc-urges-banks-to-boost-foreign-exchange-liquidity.html

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