"If Conditions Are Not Met, Requests May Cause Side Effects"
[Asia Economy Reporter Seo So-jeong] "Theoretically, there is no need for a currency swap right now. If the prerequisites are not met and we ask for a swap, it could actually have adverse effects."
On the 26th, Lee Chang-yong, Governor of the Bank of Korea, responded this way during a plenary session of the National Assembly's Planning and Finance Committee when asked by Justice Party lawmaker Jang Hye-young and others whether the Korean government took a submissive stance in the process of conducting the Korea-US currency swap. During the plenary session, ruling and opposition lawmakers raised successive questions regarding the Korea-US currency swap agreement.
Governor Lee explained, "The US Federal Reserve (Fed) has internal criteria for currency swaps," adding, "Swaps are discussed when there is a liquidity shortage problem in the global dollar market."
He said, "During the previous two Korea-US currency swaps, the agreement was not made only with our country; it was simultaneously concluded with nine countries when there was a shortage of dollar liquidity," and added, "The Fed is monitoring whether conditions such as dollar liquidity are met."
Governor Lee emphasized, "Theoretically, there is no need for a currency swap right now," but added, "However, since the public is very anxious, it would be good to secure a swap." Regarding the submissive stance controversy, he actively refuted, saying, "Discussions about currency swap prerequisites happen only when the conditions are met. If the prerequisites are not met and we ask for a swap, it could make it seem as if our country has a problem, which could have adverse effects, and that stance itself could be considered submissive."
However, Governor Lee added, "As US Fed Chair Jerome Powell mentioned, I can say that there is information exchange (between the Bank of Korea and the Fed)," and continued, "If market conditions arise that would trigger a swap, information will be exchanged, and related channels are already established."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
