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Despite the government¡¯s promise to inject W133 trillion of cash to ease short-term liquidity trouble after the global financial crisis began in mid-September, the market situation has not improved. And the finger of blame is being pointed at the Bank of Korea¡¯s sluggishness.
¡ß Cash shortage continues
Despite the BOK¡¯s bailout promise, 321 firms went bankrupt in October, up 118 from September and the largest number since November 2005. If the credit crunch continues, the number will snowball. But the money released so far has gone only to the banks and not to businesses.
Instead, it is going overseas. According to the BOK, the capital account in September and October recorded a deficit of US$30.3 billion. A record-breaking $20.6 billion was spent by the local banks to pay back their foreign short-term loans, while foreign investors withdrew W6 trillion from the Korean stocks and bonds markets in October and W5.4 trillion in November.
¡ß Idle BOK
Many conclude that the central bank should have considered the money going into the banks and going overseas in the first place and supplied enough liquid cash. But it has been unable to effectively execute the relief measures that it has already announced.
The BOK and the government have promised to provide W133 trillion of relief funds on over 20 occasions since September, but the industry estimates that only W50 trillion had flown into the market as of the end of November.
(englishnews@chosun.com )
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