SINGAPORE // South Korea joined worldwide efforts to shore up banks and markets pummelled by the biggest economic crisis since the Great Depression that world leaders say calls for a coordinated global response. Authorities in Seoul today pledged US$130 billion in state guarantees and capital injections just hours after US and European leaders said they planned to hold a series of global crisis summits to hammer out a global action plan.
George W Bush said yesterday he would host the first such summit, due to be held soon after the Nov 4 presidential election. A joint statement after his meeting with the French president Nicolas Sarkozy and the European Commission president Jose Manuel Barroso at the presidential retreat in Camp David said the first summit would focus "principles of reform" needed to fix the world's financial system.
"Later summits would be designed to implement agreement on specific steps," the statement said, adding that other world leaders would be contacted beginning next week. Mr Bush leaves office in January and a White House spokesman said he did not know whether the newly elected president, either Democrat Barack Obama or Republican John McCain, would be invited to attend the first summit. Japan, which chairs the Group of Eight, declared its backing for the summits, but its finance minister warned they would only be worthwhile if they produced concrete results.
"If a summit were to be held, it should come up with a strong action plan or a decision," the finance minister Shoichi Nakagawa said today. "I think the prime minister is making preparations based on this understanding." In Seoul, the authorities rushed out their rescue plan to bolster local markets plagued by worries that local banks' high level of foreign borrowing makes Asia's fourth-largest economy particularly vulnerable to the 14-month-old credit crisis.
"The government has decided to join in global coordinated efforts to stabilise financial markets and we'll continue to provide pre-emptive, decisive and sufficient measures to this end," the finance minister Kang Man-soo told reporters. The won (KRW) has lost about a third of its value against the dollar so far this year to hit its lowest level since the Asian financial crisis 11 years ago, and foreign investors have sold off a record 30 trillion won of local shares.
Analysts welcomed today's measures, saying they should soothe local markets, adding they expected the central bank to trim interest rates as early as next month to prop up sagging domestic demand. *Reuters
