South Korea needs to closely monitor the global financial markets as ongoing market jitters stemming from the eurozone debt woes are likely to persist for a considerable period of time, heads of local banks said Friday.

   Concerns that Europe's sovereign crisis would hurt the health of banks in the region have increased volatility in the global financial markets, sparking foreign investors' selling spree from Korea's stock markets.

   As there is a high chance that the current market uneasiness is likely to continue for a prolonged period, Korea needs to properly respond to a spate of external risks by keeping a close tab on the situations, eight heads from local banks said in a monthly meeting with Bank of Korea (BOK) Gov. Kim Choong-soo.

   They also added that local banks have little problems in financing foreign currency liquidity for now as they maintain stable credit lines and the rate of rolling over foreign loans stays above 100 percent.

   South Korea learned a painful lesson about the importance of strengthening banks' foreign currency liquidity after experiencing the 1997-98 Asia-wide financial crisis and the global financial turmoil.

   In the height of the global financial storm, Korean banks, saddled with high short-term external debt, had difficulties in refinancing foreign currency loans or securing FX liquidity, as foreign capital fled the country en masse.

Source: Yonhap News (Sept. 16, 2011)