Effects and Implications for Adoption of Brokerage System in Korea's Foreign Exchange Market

Yunjong Wang and Chae-Shick Chung
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Yunjong Wang: Korea Institute for International Economic Policy
Chae-Shick Chung: Korea Institute for International Economic Policy

East Asian Economic Review, 1999, vol. 3, issue 1, 47-79

Abstract: Since January 1st 1999, the South Korean government has begun to establish the understructure of the foreign exchange market in order to achieve the liberalization of foreign exchange. As one of the plans, the trade of foreign exchange which was under the monopolized mediation of the capital medium of financial settlement center will be in the charge of several commercial brokers. In the developed countries, the foreign exchange & stock system and the liberalization of foreign exchange are both widely used in a flexible way. So it is predicted that the introduction of commercial foreign exchange & stock sysSince January 1st 1999, the South Korean government has begun to establish the understructure of the foreign exchange market in order to achieve the liberalization of foreign exchange. As one of the plans, the trade of foreign exchange which was under the monopolized mediation of the capital medium of financial settlement center will be in the charge of several commercial brokers. In the developed countries, the foreign exchange & stock system and the liberalization of foreign exchange are both widely used in a flexible way. So it is predicted that the introduction of commercial foreign exchange & stock system will bring positive effect to the enhancement of the market efficiency and the function of price both in South Korean market and overseas market, the foster of competitive power of the domestic broker and the improvement of the understructure of domestic foreign exchange market. But more importantly is that the foreign exchange market must expand the scale of its participator, bring in various relevant foreign exchange products and develop the bond market which has a close relationship with the foreign exchange market for further development.

Keywords: Foreign Exchange Market; Korea (search for similar items in EconPapers)
JEL-codes: F31 F39 G32 (search for similar items in EconPapers)
Date: 1999
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