Surprise Meeting between MOSF and BOK

Minister Yoon calls on Gov. Lee to cooperate on key financial issues

Minister Yoon Jeung-hyun of the Ministry of Strategy and Finance (MOSF) called on Gov. Lee Seong-tae of the Bank of Korea (BOK) on Feb. 13 to discuss critical issues that require close cooperation between the government and the central bank in order to combat the current economic downturn, which could cause disaster to the country if proper measures are not taken, the ministry said.
In a very rare visit to the central bank by the top economic minister, Yoon and Lee agreed on close cooperation between the ministry and the central bank to overcome the worsening economic conditions. Unemployment is estimated at 3 million, with a majority of that number being young people, which is the largest so far in history and is feared to increase in the days ahead.
During a breakfast meeting held at the central bank conference room in downtown Seoul, Minister Yoon said he has worked with Gov. Lee as partners so often in the past and knows him very well. "I can tell what the governor is thinking by just looking at his eyes," Minister Yoon quipped to the reporters following the meeting.
The minister said the central bank under the leadership of Gov. Lee has been doing a marvelous job with monetary policies to stabilize the capital market and he expects it will continue to do the job well and play a bigger role in taming the economic crisis.
Yoon went on to stress that the central bank's cooperative harmony with government policies is critical, while keeping its neutrality and independence. "We have got to be unified and work together and mobilize our wisdom to ride out the rough waters of the turbulent economy," Yoon said.
The Ministry of Strategy and Finance feels that both the ministry and the central bank agreed on the need to build a cooperative system between the two to overcome the current economic slump. The two sides also agreed on the necessity to revise the Bank of Korea Law, but details are to be worked out later following an in-depth study and discussions between the two financial authorities.
In the meantime, Minister Yoon said the financial market will gradually stabilize through the cooperation between the government and the private sector.
During the first Crisis Management Meeting he presided over since taking his current post, he said the flow of funds will be smooth for SMEs with the Credit Guarantee Fund and the Technology Guarantee Fund expanding their guarantees and with the banking sector rolling over 160 trillion won worth of loans outstanding with SMEs for a year.
The creation of a 20 trillion won fund to expand bank capital as agreed between the central bank and the financial organizations would also gradually make the mediatory role of the financial market stable, he said.
On corporate restructuring, the minister said the companies with no hope for survival should be closed down so that the limited funds can go to those that can survive. He also said the financial institutions, namely the banks, should determine which of their corporate borrowers with poor business conditions must go through restructuring. Meanwhile, the government will consider various support matters in the course of restructuring, including laws, regulations and industrial policies. The government should also provide support to and make sure that the financial market will be able to take care of its own restructuring.
If the need for additional funding is agreed upon by all related sectors, it will include money for restructuring so that it can be done quickly and smoothly.
If the situation worsens despite such efforts, a contingency plan will be drawn up to take pre-emptive actions to speed up restructuring, the minister promised. nw

MOSF Minister Yoon. 2nd L, and BOK Gov. Lee, 2nd R, are pictured together before their meeting. Vice MOSF Minister Heo Kyung-wook is to the right of the BOK Gov.

MOSF Minister Yoon and BOK Gov. Lee are in conference with their assistants on their sides at the central bank's conference room in downtown Seoul Feb.13