Tip:
Highlight text to annotate it
X
The Korean government and the central bank sat down together for their second meeting
on ways to support state banks,... that will have to make up for losses incurred from corporate
restructuring. Hwang Ji-hye updates us on the options under
consideration. Directly injecting cash into state banks...
and indirectly supporting them by setting up a fund.
Both options were reviewed on Thursday... as a task force involving the finance ministry,
the Bank of Korea and other related agencies... looked for ways to expand the capital base
of state banks.
"We also discussed specific ways of managing the fund such as which institute would run
the fund and how the capital would be claimed back."
The task force emphasized... that although the financial health of the state banks are
not in conditions bad enough to cause imminent problems, expansion of capital is necessary
to preempt future instability that could be triggered in the process of corporate restructuring.
Experts say... this indicates the government is moving to prevent bigger losses.
"Loss sharing is the key issue in corporate restructuring. Restructuring of General Motors
ended up involving state money, in other words, taxes. And that's because the negative impact
on the overall economy of that company going bankrupt would have been too huge."
The central bank has remained rather reserved about using its authority to print money and
give out cash to state banks... as it's a decision that can affect the overall livelihoods
of the Korean public. But the government has been adding pressure
on the central bank to do so... as using the state budget would take longer due to the
parliamentary approval process. While the question lingers on whether there
is enough social consensus about pouring cash into the ailing shipbuilding and shipping
industries, the policymakers did make clear... that the principle of corporate restructuring
is still minimizing the burden on the public.
"And the task force is planning to lay out clear measures to expand capital for state
banks by the end of next month... and conitnuously hold meetings.
Hwang Ji-hye, Arirang News."