Tax Support Mulled to Stave Off U.S. Financial Aftershocks

Financial Services Commission Chairman Jun Kwang-woo said yesterday that the government will consider tax support for long-held stocks and bonds to stabilize investor confidence and increase stock demand.

He explained to the ruling party what impact the U.S. financial crisis will have on Korea’s financial market and the countermeasures Seoul should take at the party headquarters in central Seoul.

Jun also warned of the aggravating liquidity crisis of the largest U.S. insurer AIG, saying, “The government has closely watched the insurer’s capital flow to protect Korean insurance subscribers. We are also considering sending supervisors to prevent capital outflow.”

"To secure foreign currency liquidity, the government will also set up effective policies while issuing structured covered bonds, helping state-owned firms to draw more foreign investment, and holding more events to attract foreign investment.”

sanjuck@donga.com