S. Korea needs to maintain low interest rates, regulator says

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SEOUL, Nov. 29 (Yonhap) -- South Korea's financial regulator said Saturday the country needs to maintain low interest rates to help local companies withstand the global financial crisis.
"It's important to let interest rates remain low to prevent the financial crisis
from spreading to the domestic economy," said Rhee Chang-yong, vice chairman of
the Financial Services Commission.
In a keynote speech at a conference in Seoul, Rhee also warned that rising
household debts will spark a crisis if interest rates rise.
The Bank of Korea is scheduled to review its monetary policy on Dec. 11. The
central bank has cut its key rate down to 4 percent, a drop of 1.25 percentage
points since October.
During the speech, Rhee said the commission plans to speed up efforts to
restructure troubled companies as the nation's economy is widely expected to head
toward its first recession in a decade.
"There is a limit to the government's ability to recover the economy without
restructuring troubled companies," Rhee said.
But Rhee didn't identify which companies or industries will be restructured.
With the global financial crisis rippling through South Korea, companies are
struggling to get new loans and meet maturing debt obligations.
This week, the commission said it will form a task force to restructure
struggling companies.
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