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The end of this year will be a crucial time for economy as more threats loom, experts predict. The demand for year-end settlement could still hurt the currency market, since many firms will need more funds to settle payments but banks will want to meet the capital adequacy ratio set by the Bank for International Settlements, making them reluctant to lend.
This could create heated competition among businesses and banks to secure ready cash, making things still worse for small- and medium-sized enterprises. During the 1997 Asian economic crisis, the time when the most number of firms went bankrupt was February 1998, three months after the Korean government filed for International Monetary Fund rescue funds, when 3,377 companies went belly-up.
The leadership of the United States is weak in transition, with President-elect Barack Obama inaugurated on Jan. 20. President George W. Bush and Obama are already in dispute over whether the government should bail out struggling U.S. carmakers.
Although many countries announced that they would provide relief funds and expand budgetary spending, not much money has actually been put into the market, except for buying shares of banks. In Korea, it will not be until the first half of next year that various measures to boost the economy kick after the National Assembly passes them.
This means the world is likely to face a tight Christmas. Oh Moon-suk, a senior economist at LG Economic Research Institute, said ˇ°WeˇŻll know by the end of this year if a vicious cycle of financial crisis, real economy slowdown and financial crisis will continue. It will be a decisive moment for the current crisis.ˇ±
(englishnews@chosun.com )
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