contingency plan 비상상황 대응체계
Post on 11-Jan-2016
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Policy Responses To North Korean Provocation
To: Jeung-Hyun Yoon, Minister of Strategy and Finance
From: Kimchi Park, Department of Crisis Management, MOSF
Bottom Line:Recommend approving plan for monetary policy in case of unusually large NK attack.
Currently…Status-quo of “low level” provocations
e.g. ROKS Cheonan, Yeonpyeong IslandLow casualties (< 50-100 dead), relatively infrequent (≥ six
months)
…Market Confidence
Crying wolf
Currency Reaction to Yeonpyeong
Contingency plan activated…
Non status-quo provocationi.e. larger and/or sooner than
usualMarket reaction would be
stronger
For:
Contingency Plan Activated…By…ObservationHotline partners
Financial and foreign exchange authorities
Commercial banks
Objectives
2. Stabilize exchange rate
3. Prevent massive losses in stock market
4. Preserve trade in resources and commodities
1. Prevent market panic and herd behavior
Contingency PlanPrevent capital outflow:
Close KOSPI stock exchangeExempt foreigners from
withholding taxTax funds remitted abroad
Maintain exchange rate:Purchase won with large foreign reserves
Public relations:Press conferencesCredit rating agencies
Bottom LineKorean economy relatively
resistant to exogenous shocksIncreasing tradeCurrent account surplusHigh savings rateLarge foreign reservesUS support
Market shows history of confidence in KoreaLack of confidence in North Korean credibility
President Lee Myung-bak
But…
“Let’s smash them with a single blow!”
Questions?
Currency Reaction to Cheonan
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