S.Korea mulls controls on foreign banks’ forex liquidity

October 16, 2009

SEOUL, Oct 16 (Reuters) – The South Korean government is considering controlling foreign currency liquidity at branches of foreign banks in the country to cope with potential financial market crises, a senior finance ministry official said.

The country has regulations on foreign currency liquidity ratios for local banks, but not branches of foreign banks.

Last month, a top financial regulator said the country was discussing measures to crack down on excessive foreign-currency borrowing by banks. [ID:nSEO112172]

“A task force is reviewing controls on foreign currency liquidity ratios of foreign banks,” the official told Reuters late on Thursday, asking not to be identified as he was not authorised to speak to the media.

The government will implement measures gradually if it decides to carry out any steps, he added, without giving specific details of such a move.

On Thursday, Bank of Korea Governor Lee Seong-tae said the country needed additional measures to deal with massive foreign currency liquidity outflows.

(Reporting by Lee Shin-hyung; Writing by Cheon Jong-woo; Editing by Kim Coghill) ((jongwoo.cheon@thomsonreuters.com; +82 2 3704 5665; Reuters Messaging;jongwoo.cheon.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))
Keywords: KOREA ECONOMY/FOREX

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Thursday, 15 October 2009 20:34:25RTRS [nSEO126696] {EN}ENDS

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