In response to dismal global credit conditions, the South Korean government outlined a proposal over the weekend that would inject $130 billion into its financial system.
Under the plan, which needs to be approved by South Korea’s General Assembly, the country will guarantee $100 billion in its bank’s external debts for three years and supply lenders with $30 billion.
In an effort to strengthen South Korea’s asset management companies, the government would also provide tax benefits for long-term equity and bond investors.
The proposal also would involve the Bank of Korea’s buying repurchasing agreements and government bonds to help “soothe the uncertainty of the financial market.”
South Korea’s move follows steps taken by last week other central banks to bolster liquidity, including the Federal Reserve, the Bank of England, the European Central Bank, the Bank of Japan and the Swiss National Bank (InvestmentNews, Oct. 13).
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