BoK launches facility to guard against dollar liquidity squeeze

Bank of Korea building in Seoul

South Korea’s central bank has created a new scheme to pump US dollars into the country’s banking system when needed.

Under the scheme, the Bank of Korea will buy foreign currency-denominated bonds – such as US Treasuries – via repurchase agreements from local banks, if the central bank sees a potential dollar crunch.

Having made preparations such as revising regulations and establishing the necessary operational procedures, the BoK will implement the new policy instrument today (September 29)

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