Introduction

Main Drivers

- Inflation

- Won Appreciation

- Relaxations of Capital controls

- Bad investments

IMF Rescue Package

Conditions IMF bailout

- Restructuring of financial sector

- Liberalization of International trade

- Raise interest rate

- Reduce government deficit

Effect of conditions

"To reverse this process, countries have to make it more attractive to hold domestic currency, and that means temporarily raising interest rates, even if this complicates the situation of weak banks and corporations."-Stanley Fischer

Effect of Capital flight & SK

- Capital inflow & investor confidence

- Currency drop & Capital flight spiral

- SK currency drop 2nd effect

Leverage & Capital flight

- SK debt mostly short-term

- Credit rating & money market

- Maturity as Moderating variable

Questions?

Rolf Bolte / Laurens ten Cate / Max Misovic Maarten-Lucas van der Meeren / Olivia Oscar