Lee proposes ministerial talks with Japan, China over global turmoil

(ATTN: UPDATES with more details and background from 4th para)

By Yoo Cheong-mo
SEOUL, Oct. 3 (Yonhap) -- South Korean President Lee Myung-bak proposed Friday that the finance ministers of his country, China and Japan meet to discuss closer policy coordination in the face of the U.S.-sparked global financial turmoil.

Lee made the proposal while presiding over a meeting with his financial
policymakers, including Finance Minister Kang Man-soo, at the presidential office
Cheong Wa Dae, according to presidential spokesman Lee Dong-kwan.
The president also instructed his Cabinet to immediately push to hold a bilateral
finance ministerial meeting with Russia, which was agreed to during his summit
with Russian President Dmitry Medvedev in Moscow on Monday.
"Asia is the world's economic growth engine. But the U.S.-originated financial
crisis is showing signs of spreading globally and depressing the entire world's
real economy," the president was quoted by his spokesman as saying before
stressing the need for closer policy consultations with Japan and China.
Lee ordered his ministers to secure the maximum amount of foreign exchange
liquidity and transparently disclose all financial and foreign exchange data to
calm market jitters.
"All information on the nation's foreign exchange reserves and external debts
should be made public in a transparent manner to prevent the spread of
unnecessary unrest in the local financial market and restore the confidence of
local investors," the president told the meeting, according to his spokesman.
"In particular, the government has to take all necessary measures or even enforce
systemic changes to maximize the nation's foreign exchange liquidity."
The president also stressed that local financial institutions establish a phased
contingency plan with the worst case scenarios in mind, the spokesman said.
"Domestic financial institutions are required to reinforce their self-rescue
efforts to secure a more amount of foreign exchange liquidity and cope with the
global turmoil more confidently."
Since returning from a four-day trip to Russia, Lee has instructed his economic
policymakers to release additional foreign currency holdings and take other
measures to stabilize the local market. He has also ordered civil servants to
refrain from nonessential overseas travels this year in a nationwide drive to
save foreign currencies.
In recent weeks, the value of the Korean won has steadily weakened against the
U.S. dollar, plunging to 1,223 won against the greenback on Thursday, the weakest
in five years and five months. The crash in the value of the won came amid
growing concern over the nation's shrinking foreign exchange reserves.
Seeking to calm market jitters, the finance minister, Kang, said at the Cheong Wa
Dae meeting that South Korea's foreign exchange holdings stood at US$239.7
billion as of the end of September, which compared with $20.4 billion a decade
ago.
"The almost entire volume of the nation's foreign currency holdings can be
immediately mobilized, as they are now invested in state bonds of major advanced
countries," he said. "Furthermore, the nation's current account is expected to
swing to the black in the fourth quarter of this year."
According to the presidential spokesman, other participants in the meeting also
stressed the need to drastically strengthen the international competitiveness of
the nation's financial industries.
ycm@yna.co.kr
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