1. South Korea's membership in the IMF

2. South Korea's Reaction to IMF Intervention in 1997

3. Financial Safety Net

4. References

In 1997, South Korea opened its borders to many of the largest financial institutions in the world to reduce the impact of the 1997 Asian financial crisis.^[1] The residual costs from the conditions of the International Monetary Fund (IMF) loans continue to affect the country.^[2] Today these costs are associated with cuts in funding for government programs, higher unemployment, and slow economic growth. South Korea has now created a safety net with other Asian nations, so that a financial crisis may be avoided in the future.^[2]

South Korea's membership in the IMF

South Korea joined the International Monetary Fund on August 26, 1955.^[3] The country has contributed 8,582.7 million SDR (Special Drawing Rights) to the IMF quota, which comprises 1.81% of the IMF's funds.^[4] South Korea currently has 87,292 votes in the IMF, which is 1.73% of the total voting power within the organization.^[4] South Korea's current IMF Board of Governor is Dong Yeon Kim and the alternate Board of Governor is Juyeol Lee.^[4]

South Korea's Reaction to IMF Intervention in 1997

Since the Korean War in 1953, the Economy of South Korea has experienced sustainable growth but faced an economic downturn during the Asian Financial Crisis in 1997. Along with other organizations, the IMF led a bailout that amounted to loans of $57 billion of which $21 billion were IMF-funded. This stabilized South Korea's foreign exchange market^[5]. The bailout had conditions, which forced Koreans to go through new restructuring policies and programs set by the IMF such as new labor market flexibility policies which allowed more flexibility in the firing of employees to be made easier.^[5][6][7] In addition, some IMF policies and programs forced the Korean economy to slash government expenditure, raise interest rates, liberalize trade with other nations, restructure the government, and stop Korean conglomerates from growing in the hopes of stopping inflation and raising more foreign reserves.^[5][6][7]

The citizens of South Korea were greatly affected by the policies. Unemployment nearly tripled from 2.05% in 1997 to 6.96% in 1999.^[8] Additionally, during the time of crisis, South Korean citizens rallied and voluntarily participated in the gold collecting campaign in the hopes of paying off South Korea's loan to the IMF. Around a quarter of the nation's population participated in the campaign from all levels of social class selling gold such as wedding bands and sport medals.^[9] The end total amount from the gold campaign came out to be $2.2 billion^[9] which helped eased South Korea's debt.

Financial Safety Net

South Korea has not taken out such a large loan from the IMF since the 1997 Asian Financial Crisis. According to the Organization for Economic Co-operation and Development (OECD), South Korea's reserves have increased from 21.556 million SDR in 1997 to 247.759 million SDR in 2014.^[10] As of 2017, the nation's foreign reserves are around $390 billion SDR.^[11]

As a result of the increasing complexity in the global market and world financial systems, South Korea joined the CMI (China's Mai Initiative materialization) to prevent another financial crisis like the 1997 Asian Financial Crisis. The CMI is an agreement between Southern East Asian countries to help alleviate balance of payment issues by using each country's respective foreign reserves and to ensure financial contagion will not spread. The agreement is not enforced by any country or countries and has never been used before, but the CMI still acts as insurance for any future financial crisis. The agreement comprises South Korea, China, Hong Kong, Japan, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Cambodia, Myanmar, Brunei, and Laos. The agreement was made in order for these nations to stop hoarding foreign reserves,^[12] which could theoretically help these countries' economies grow, allow foreign investors to trust these Asian countries' currencies more, and act as a safety net for South Korea's economy and the other comprising Asian countries' economies.^[13]

References

• New York State Route 64 (1920s–1930)
• New York State Route 646
• New York State Route 656
• New York State Route 6B
• New York State Route 6 (disambiguation)
• New York State Route 70 (1920s–1930)
• New York State Route 71
• New York State Route 7 (1924–mid-1920s)
• New York State Route 72 (1920s–1930)
• New York State Route 72A
• New York State Route 74
• New York State Route 74 (1920s–1930)
• New York State Route 74 (1930–1973)
• New York State Route 74 (1930 – early 1970s)
• New York State Route 74 and Vermont Route 74
• New York State Route 74 (disambiguation)
• New York State Route 75 (1930–1932)
• New York State Route 75 (1930–mid-1930s)
• New York State Route 76 (1927–1930)
• New York State Route 77A
• New York State Route 781
• New York State Route 78A
• New York State Route 7B (1930s)
• New York State Route 7B (1930–1970)
• New York State Route 7 (disambiguation)