BoK’s Kim: Asia was well prepared for market turmoil

Kim Choong-soo, the governor of the Bank of Korea, on Tuesday explained how lessons from the Asian crisis helped prepare policymakers in Asia with an effective response to the recent financial crisis.

"We learn more when something goes wrong than when everything hums along smoothly. We have become more knowledgeable about the global economy through a series of crises," Kim said.

Kim said since the Asian currency crisis in 1997, contagion was quickly understood as a key factor threatening the stability of the global economy. He said the latest US financial crisis hit Asian countries hard, but that they have shown remarkable resilience and are now regarded as the powerhouse for the growth of the global economy.

He said emerging market countries were able to respond through domestic policy actions, by allowing exchange rates to depreciate, and by making use of accumulated reserves to help cushion the impact of the shock. However, he warned, this was often only partially effective, as in a number of cases countries still had to rely on external cooperation from the likes of the IMF. "As the global economy has become more integrated, crises have also evolved in their scope of influence and propagation mechanism," Kim said.

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