Gov’t To Allow Local Securities-Insurance Companies To Deal In Foreign Exchange

The government decided to push forward with the 10 year plan for the mid- and long term development of foreign exchange market beginning next year. This plan calls for the participation of local stock markets and insurance companies in foreign exchange transaction and the gradual expansion of the trade items.

Ministry of Finance and Economy announced yesterday in the report entitled `Plan on the vision of the mid- and long term development of foreign exchange market`, that ``the government will build up Korea as the finance-centered nation comparable to Tokyo, Hong Kong, and Singapore by 2011. The report was suggested by the first general meeting of the review committee on the financial development. As the first step toward this goal, the government will focus on the development of the domestic foreign exchange market from next year until 2005.`` In order to achieve this goal, the government decided to allow the participation of the investment bank, local securities, and insurance companies in the foreign exchange market in which 23 banks, 11 general banking industries, and 44 foreign banks are currently participating. Along with this, the government decided to diversify the trade items in the foreign exchange market and to strengthen the function of foreign brokers.

The second step calls for the activation of the cross-currency transaction market, such as yen-dollar trade, and the cyber foreign exchange transaction. The last step calls for a plan to host the regional office of the world-renowned financial organizations by setting up the exchange system equivalent to the systems of the OECD top nations.

Ministry of Finance and Economy said in a separately submitted report titled, `Result of the reform of the financial system and the task of policy hereafter`, ``The government plans to allow five companies to join foreign investors for the sale of Daehan Saengmyong based on the premise that they will not hold the management power.``

Along with this, the Ministry said that ``the government will complete the evaluation process on 1,544 companies that have undergone creditor scrutiny under the so-called constant credit assessment system by September to determine which companies should be liquidated.``

Regarding the issue of the matured corporation bonds, the Ministry said that ``as soon as the swift underwriting system of the corporation bonds is over at the end of this year, the government will encourage the high profit and high risk bond market to solve the 34 trillion won of corporation bonds, which are to be expired next year.`` Ministry of Finance and Economy decided to consider the integration of the finance related regulations, which are currently divided into the Trust Act, Stock Investment Trust Act, and the Stock Investment Corporation Act, to change into the supervisory system based on function.

Park Joong-Hyun sanjuck@donga.com