BOK purchases 1.1 tln won in bank, other bonds through repos

SEOUL, Dec. 17 (Yonhap) -- South Korea's central bank said Wednesday it bought
1.1 trillion won (US$842.9 million) worth of debt sold by banks and other
state-run agencies through repurchase agreement deals in a bid to help ease a
credit crunch.

"The central bank purchased 1.05 trillion won in bank bonds and 68.4 billion won
in other debt," the Bank of Korea (BOK) said, adding that the combined purchase
of such bonds reached 3.81 trillion won as of Tuesday.
On Monday, the central bank 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. As part of such a move, the BOK held an auction for 91-day repos
on Tuesday to supply 2 trillion won.
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
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