BOK buys 987 bln won in bank, other bonds

SEOUL, Dec. 16 (Yonhap) -- South Korea's central bank said Tuesday it bought 987 billion won (US$725 million) worth of debts issued by banks and other state-run agencies through repurchase agreement deals in a bid to help ease a credit crunch.

"Through the deals, the BOK purchased 830.3 billion won in bank bonds and 156.9
billion won in other debts," the central bank said, adding that the combined
purchase of such bonds reached 2.69 trillion won as of Monday.
On Monday, the Bank of Korea (BOK) said it would pump a combined 6.5 trillion won
in liquidity into the financial system this week by buying longer-dated
repurchase agreement deals.
The proceeds of bond sales by financial firms will be used to contribute to a
10-trillion-won bond fund aimed at stabilizing the local debt market. The fund is
to be launched on Wednesday.
A repurchase agreement is a deal whereby one party sells the other a security at
a specified price with a commitment to buy the security back at a later date. It
is the central bank's main method of releasing liquidity into the market in a
credit crunch and siphoning off excess liquidity.
In late October, the BOK decided to include bank bonds and some special debts as
collateral for its open market operations. On Thursday, it also decided to allow
an additional 12 brokerage houses to participate in its repurchase agreement
operations to swiftly provide liquidity to the financial system.
sooyeon@yna.co.kr
(END)

Download this as a file