South Korea has announced emergency measures to stem the effects of the U.S.-originated financial crisis. The plan includes a massive guarantee of the country's foreign debt, and an injection of dollars into the banking system. Dutch officials said Sunday the government will inject $13 billion into Dutch financial group ING, one of the world's 20 largest banks. ING warned Friday that it expects to post a quarterly net loss of $670 million due to the credit crisis. VOA's Kurt Achin has more from Seoul.
Top officials from South Korea's three main government financial agencies - the Ministry of Strategy and Finance, the Bank of Korea, and the Financial Services Commission - announced the plan Sunday.
Minister of Strategy and Finance Kang Man-soo says Seoul will provide the bank guarantees as soon as possible after approval from the National Assembly, the country's parliament. In the interim, he says, South Korea's main state-run banks will guarantee the loans.
South Korea will also provide $30 billion to banks and exporters from its supply of foreign currency reserves.
South Korea's economy is the fourth largest in Asia, and is heavily dependent on international business transacted mainly in dollars. However, a global crisis of confidence resulting from U.S. bank failures has led to a dollar shortage - as many institutions hoard U.S. currency and refuse to lend to each other.
South Korea's currency, the won, has dropped in value nearly 30 percent this year against the dollar. South Korea's main stock index has fallen 38 percent this year, mirroring the stock plunge on Wall Street.
Finance Minister Kang says quick action will be required in the days ahead.
He says if we take our time in the global financial market, South Korean banks could be discriminated against or could find themselves in a difficult situation.
South Korean officials say the country's economy is fundamentally sound, and that its more than a quarter trillion dollars in foreign reserves puts it in a good position to deal with the crisis.