Currency Swaps, Debt Restructuring, Corporate Liquidity Crisis Response
"Yoon Administration's Measures Are Too Lax"
Kim Tae-nyeon, Chair of the Democratic Party's Nomination Management Committee, is delivering opening remarks at the AI interview screening for metropolitan mayoral candidates held at the party headquarters in Yeouido, Seoul, on the 12th. Photo by Yoon Dong-joo doso7@
[Asia Economy reporters Naju-seok and Park Joon-yi] The Democratic Party's Special Committee on Economic Crisis Response criticized the Yoon Seok-yeol administration on the 28th for having no "emergency measures" despite the global economic crisis. They pointed out the current government's policy direction, including corporate tax cuts, saying, "Hasn't it been proven that the trickle-down effect is ineffective?"
Kim Tae-nyeon, chairman of the Democratic Party's Special Committee on Economic Crisis Response, said at a press briefing held at the National Assembly, "We urgently make a few proposals," and criticized, "The control tower that should manage and overcome the crisis is not functioning properly."
Chairman Kim said, "An emergency economic central countermeasures headquarters (Central Headquarters) must be immediately activated under the president's leadership," adding, "In an economic crisis, the president must directly operate the control tower role." He cited, "During the 2008 economic crisis, MB held emergency economic countermeasure meetings, and during the 2020 pandemic, President Moon Jae-in directly presided over the emergency economic central headquarters meetings." He added, "In emergencies, it is common sense for the president to directly preside over the control tower," and said, "The president must directly manage prices."
Regarding the exchange rate, he proposed pursuing currency swaps with countries such as the United States. Kim said, "Although foreign exchange reserves are stable, it seems that the U.S. exchange rate will reverse interest rates," and "According to the Bank of Korea's announcement, a trade deficit is expected. Currency swaps must be expedited to stabilize the foreign exchange market." He continued, "It is necessary to take measures to prevent turmoil in the foreign exchange market by signing currency swaps with various countries, including the United States."
Regarding the trend of interest rate hikes and the termination of various policy products related to COVID-19 support, he said, "Difficulties are expected to increase, especially for low-income self-employed individuals," and urged, "An exit strategy must be prepared through active economic and financial policies along with debt restructuring." Concerning liquidity crises of companies, he said, "Liquidity crises in the service, passenger, and transportation industries must be carefully examined, and subsidies should be expanded if necessary."
Regarding prices, he said, "The Ministry of Economy and Finance, Ministry of Trade, Industry and Energy, Ministry of Agriculture, and Customs Service must cooperate across all departments," and "It is necessary to frequently monitor raw material supply situations and various import conditions to manage and prevent price surges."
Chairman Kim diagnosed this crisis as the third economic crisis of the 21st century. He said, "The current situation is the third global economic crisis experienced in the 21st century, following the 2008 economic crisis and the 2020 COVID-19 pandemic," diagnosing, "In this crisis, our people's livelihoods are facing great hardship due to the triple high of high prices, high interest rates, and high exchange rates."
Chairman Kim said, "Previous crises we experienced all occurred in unpredictable situations, but the current crisis is different in that it was already anticipated from the end of last year as we entered the COVID recovery period," adding, "It is a sufficiently anticipated crisis, but it seems to be a gray rhino situation where it is overlooked and not properly responded to."
He said, "More than three months have passed since the Yoon Seok-yeol government took office, and about 50 days since inauguration, but there is not a single emergency measure to be implemented immediately," criticizing, "Even during the 2008 economic crisis, the president held price countermeasure meetings frequently, but now only general statements are made without holding any related countermeasure meetings."
He said, "Looking at the recent economic meeting results, the government's attitude toward the current situation appears very complacent," and diagnosed, "The macro-financial economic meeting on the 16th only said they would respond to the crisis but had no measures, and the newly held new government economic measures only said they would strengthen the economic security control tower and establish a permanent crisis response system. That's all." Chairman Kim said, "It is a situation requiring emergency measures, but the response seems complacent."
Regarding the Yoon Seok-yeol government's small government theory, he said, "If it is a capitalist market economy crisis, it is a case where the market cannot play its role on its own," and "The government must actively intervene to resolve the crisis." He continued, "There is a claim that minimizing government intervention will revitalize the economy and market, but that means lowering taxes for the rich and wielding the whip over conglomerates, large corporations, and economic strongmen. The idea is that the so-called trickle-down effect will revive the economy," adding, "(As) is well known, hasn't it been proven ineffective?"
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