SEOUL, June 19 (Yonhap) -- South Korea should address its own weakness in economic or market conditions in a bid to better cope with risks from global liquidity amid speculation over U.S. stimulus pullback, the top central banker said Wednesday.
"As it is hard for one country to curb globally moving liquidity, (global) coordination is needed," Bank of Korea (BOK) Gov. Kim Choong-soo said before holding a monthly meeting with economic experts.
However, the governor said that as each country has its own weaknesses in terms of policy actions and economic conditions, they should individually make their own efforts to address this abnormality.
"In that sense, South Korea should prepare to curb its own peculiar weakness (which makes it prone to a crisis)," Gov. Kim noted.
His remarks came as emerging countries are now more concerned about a possible sudden reversal of massive foreign capital inflows. Quantitative easing moves by advanced economies have led cheap money to flow into emerging countries, raising the risks of asset bubbles and currency appreciation.
The governor said that there is no single yardstick to measure the volume of liquidity, but global liquidity is seen as being five or six times larger than the size of global trade.
Since late May, the global financial markets have suffered from high volatility amid growing speculation that the Federal Reserve may start to scale back its bond-purchasing stimulus program this year. Bond yields are on the rise globally and emerging countries' currencies are turning weaker against the U.S. dollar.
According to the BOK, the participants said that Korea should make efforts to minimize the impacts of external shocks on the local economy by enhancing fundamentals in its financial markets.
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