DIYbanter - OT-S. Korea unveils currency controls

On Sun, 13 Jun 2010 01:26:47 -0700, "azotic"
wrote:

The new rules will cap domestic banks' and non-bank financial institutions'
currency forwards and derivatives at 50 percent of their equity capital. The
cap for foreign bank branches was set at 250 percent of equity to account
for their lower capital, which on average is just 1/30 of that held by
domestic banks.

http://www.reuters.com/article/idUSTRE65C0HZ20100613

Best Regards

Tom.

=============
SK is to be commended for their proactive actions.

It remains to be seen if the results are what are
anticipated, or if the law of unintended consequences will
intervene, but they at least are attempting to reduce
domestic speculation/manipulation of their currency.

Of particular interest is the limitations on the volume of
foreign currency linked derivatives to what is required to
cover actual foreign transactions as well as limitations on
the internal lending of foreign currency to no more than
what is required for "real" foreign transactions.

S Korea and the Asian tigers were "squeezed" once by the
speculators, and appear to have learned their lesson well
(which is more than can be said about Washington and
Europe).
For some background information and some insight why certain
controls were imposed see:
http://en.wikipedia.org/wiki/1997_As...nancial_Crisis
http://en.wikipedia.org/wiki/Economy..._Korea#Economy

--

-- Unka George (George McDuffee)
...............................
The past is a foreign country;
they do things differently there.
L. P. Hartley (1895-1972), British author.
The Go-Between, Prologue (1953).