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S. Korea to push for controls on excessive capital flows: official

All Headlines 11:54 December 03, 2010

SEOUL, Dec. 3 (Yonhap) -- South Korea will push ahead with a plan to control excessive capital flows in an effort to prevent them from roiling the local financial market, a senior presidential economic advisor said Friday.

In a meeting with reporters, Kang Man-soo said there is no significant change in the government's decision to better regulate cross-border capital flows, despite a rise in geopolitical risks following North Korea's shelling of an island in the Yellow Sea on Nov. 23.

"The plan is getting underway according to schedule," the former finance minister said, indicating that Seoul wants to settle the issue before the end of the year.

The attack that left four people dead, including two civilians, caused many people to worry about inter-Korean relations, although it has not seriously affected the market, investments or the country's sovereign rating level so far.

In order to keep excessive capital flows from jolting its financial market, Seoul is considering introducing a new bank levy system, fresh restrictions on the forward exchange market and slapping taxes on foreign investments of South Korean treasuries.

Seoul opted not to levy taxes on treasuries in May 2009 and took other steps in a bid to attract more investments and cope with the liquidity crunch caused by the collapse of U.S. investment giant Lehman Brothers in late 2008.

Vice Finance Minister Yim Jong-yong said last month that while no firm date has been set, government action to control excessive capital flow will likely be completed by year's end.

yonngong@yna.co.kr
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