Korean economy already at its limits
2020/03/14
Wuhan Pneumonia virus (Corona 19) In a situation
Iran has requested an emergency funding of about 6 trillion won from the IMF on March 12 .
Italy, which banned the movement of all nations, has a high national debt ratio,
Wuhan pneumonia virus (Corona 19) has the highest number of confirmed patients in Europe.
The probability of a foreign exchange crisis is increasing.
Argentina has been receiving IMF rescue financing since 2019 .
The current foreign exchange tribal state
Italy, Turkey, India, Indonesia,
Brazil, Pakistan, and South Africa.
Professor Kim Daejong (김대종),
“Wuhan Pneumonia Virus (Corona 19) Shortage of global dollars,
Korea U.S./Korea Japan Currency Swap Rejection,
Japan's Korea short-term foreign bond ratio rose,
Korea's high trade dependence 75%
And emerging country nations
The uncertainty of international financial markets is increasing. "
"The most important thing is the signing of a US-Korea-Korea-Japan currency swap.
We have to double our foreign currency reserves and prepare for it sooner. "
There are four different theories for proper foreign currency reserves.
nitially, the IMF recommends the appropriate amount of foreign exchange to be paid for three months (recurring).
Since the amount of one month (ordinary) payment of Korea is about 50 billion dollars,
Three months is $ 150 billion.
Argentina has stockpiled $ 65.2 billion in foreign exchange reserves as recommended by the IMF
However, the state has been beaten.
Do not believe in IMF recommendations.
States must reserve enough foreign exchange reserves above the IMF recommendations.
Second IMF newly proposed
The appropriate foreign currency reserve is about $ 681 billion, including a 15% foreign equity fund.
South Korea is $ 300 billion short of IMF recommendations.
Third 1999 Green span
And planning, Pablo Gidotti
<3 months (ordinary) payment + current foreign bonds
( 100% of short-term foreign bonds and long-term bonds with maturities returning one year in advance )> .
2020 Korean short-term foreign bonds amount to about $ 150 billion.
If the maturity returns within one year in a long-term bond
Since it is not exactly known, it is usually based on 200% of short-term foreign bonds.
Current foreign bonds are about $ 300 billion.
The appropriate foreign currency reserve for planning (prayer) is $ 450 billion.
The fourth is the recommendation of the 2004 Bank for International Settlements (BIS) . BIS
<3 months (ordinary) payment + current foreign bonds + foreign equity investment funds 1/3
+ Resident foreign currency deposit balance ( $ 70 billion ) + Local financial balance >
Was presented.
Japan's market capitalization is about 1,400 trillion won at the end of 2019 .
Of this, about 50% , or 700 trillion won, is for foreign stock investment.
BIS recommends an appropriate foreign currency reserve of $ 830 billion.
In March 2020 , Japan's foreign exchange reserves of $ 401.9 billion will be $ 430 billion short of BIS recommendations.
Foreign reserves account for 25% of Korea's GDP, making it the lowest ranking country in the world.
Professor Kim Daejong (김대종),
“In Korea, high capital market openness and liquidity make it easy for foreigners to flow out.
The Korean government has re-concluded a currency swap with the United States that ended in 2010
You have to be thorough. "
And suggested.
Korea's foreign currency reserves are very short compared to the size of its economy.
The current stockpile is 25% of Korea's $ 1.6 trillion GDP .
At the time of the 1997 Asian Foreign Exchange Crisis, Taiwan did not experience any foreign exchange crisis.
The reason is that Taiwan has stockpiled about 80% of its GDP in foreign exchange reserves.
If you look at the ratio of foreign reserves to GDP by country
120% in Switzerland, 124 % in Hong Kong and 65% in Saudi Arabia.
These countries have lower GDP but more foreign currency reserves than South Korea.
Professor Kim Daejong (김대종),
"The Bank of Korea says it is the ninth largest foreign exchange reserve in the world, but it is meaningless.
Less than half of Japan's GDP
Switzerland, Hong Kong, Taiwan, and Saudi Arabia
Foreign currency reserves are even higher than in Korea. "
Pointed out.
Professor Kim Daejong (김대종),
"Bank of Korea reassures public that $ 409.7 billion is the world's ninth largest foreign currency reserve
However, in practice it is short of the levels recommended by the IMF and BIS .
Korea, the country's fifth- largest manufacturing nation, has a trade dependency of 75% .
Therefore, when a current account surplus occurs
Must be well stockpiled over $ 1 trillion
"
In 2015 , Japan refused to sign a Korean-Japanese currency swap requested by Korea.
Self-esteem is hurt by recent extortion
Must re-conclude a currency swap with Japan following the United States.
Also, like the national defense, in the international financial markets
So that we can protect the economy on our own,
Foreign exchange reserves, the first defense, must be stockpiled by more than $ 1 trillion.
Chinese yuan and Japanese yen are key currencies recognized in international settlement
So it's safe from the foreign exchange crisis.
Korea, Japan's dependence on trade ( export + income (import) ) / GDP is 75% , the highest level in the world
So foreign currency reserves are very important.
Professor Kim Daejong (김대종),
“ March 2020 to date experienced the 1997 IMF crisis and the 2008 international financial crisis
The Korean government has not stockpiled enough foreign exchange reserves. "
Pointed out.
The Bank of Korea's foreign currency reserve management is also a problem.
If you look at the composition of foreign currency assets of the Bank of Korea
< 36% government bonds, 21% government agency bonds, 14% corporate bonds, 13% asset securitization receivables (MBS) , 7.7% equity >
It is.
Corporate bonds and MBS are risky assets with a risk of default.
Professor Kim Daejong (김대종),
“The Bank of Korea sold corporate bonds and liquidation assets,
You have to operate around cash and government bonds so that you can withdraw at any time. "
Said
Professor Kim Daejong (김대종),
“The three main principles of investment are security, profitability and cash value.
Foreign currency reserves are too important to sell mortgage receivables,
Unlike government bonds, the weight must be increased. "
Pointed out.
Professor Kim Daejong (김대종),
“Wuhan Pneumonia Virus (Corona 19) Economic crisis
All Koreans must unite and overcome.
The Korean government immediately signed a Korean US currency swap,
Foreign exchange reserves must be increased to $ 830 billion as per BIS recommendations.
Korean people fall into grief again
Be prepared to not experience the IMF Forex Crisis. "
It was emphasized.
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