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Korea should drop 'peculiar' schemes to better cope with liquidity risk: BOK head

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(Globalpost/GlobalPost)

SEOUL, June 19 (Yonhap) -- South Korea should address "peculiar" policies that are vulnerable to a crisis in a bid to better cope with risks from global liquidity, the top central banker said Wednesday.

"As it is hard for one country to curb globally moving liquidity, (global) coordination is needed," Bank of Korea (BOK) Gov. Kim Choong-soo said before holding a monthly meeting with economic experts.

However, the governor said that as each country has its own weaknesses in terms of policy actions and economic conditions, they should individually make their own efforts to address this abnormality.

"In that sense, South Korea should prepare to curb its own peculiar weakness (which makes it prone to a crisis)," Gov. Kim noted.

His remarks came as emerging countries are now more concerned about a possible sudden reversal of massive foreign capital inflows. Quantitative easing moves by advanced economies have led cheap money to flow into emerging countries, raising risks of asset bubbles and currency strength.

He said that there is no single yardstick to measure the volume of liquidity, but global liquidity is seen as being five or six times larger than the size of global trade.

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http://www.globalpost.com/dispatch/news/yonhap-news-agency/130618/korea-should-drop-peculiar-schemes-better-cope-liquidity-ris