동영상/ 코리아헤설드 사설(2012.11.01일자) 해설(1~2)

코리아헤설드 사설(2012.11.01일자) 해설(1)

 

코리아헤설드 사설(2012.11.01일자) 해설(2)

 

 

The Korea Herald

 

2012-11-01

 

[Editorial] A proper cure?

 

Political circles appear to be hurrying ― without thinking fully ― to adopt a controversial idea of introducing a tax on foreign exchange transactions, known as the Tobin tax. The steep appreciation of the won against the U.S. dollar, partly caused by the surging inflow of foreign capital in the wake of massive stimulus by the world’s key economies, has prompted the parties and major presidential candidates to consider enacting it.

 

The measure would have a certain degree of effect on curbing short-term currency trading. But more comprehensive consideration should be given to its full consequences.

 

There seems to be no need to jump to the conclusion of introducing the tax without thoroughly reviewing reasons for the recent appreciation of the won and cautiously watching for movements abroad toward taking a similar step.

 

The country’s financial markets proved vulnerable to speculative capital flows during the foreign exchange crisis in 1997 and the global credit crunch in 2008. Depending on an open economy for its prosperity, however, Korea is certainly not the country to take the lead in putting into practice an idea that has been subject to global debate for decades.

 

The Tobin tax was proposed by Nobel prize-winning U.S. economist James Tobin in 1972 as a way of reducing currency speculation and thus financial market volatility. The basic idea is to impose a seemingly small tax ― between 0.01 percent and 0.1 percent ― on trades of foreign exchange, stocks, bond and derivatives.

 

Party officials and aides to the major presidential contenders have recently endorsed the proposal in one form or another. They say it would put a brake on the steep rise in the value of the won by curbing speculative currency trading and thus help buttress the competitiveness of Korean exporters.

 

A key economic adviser to Rep. Park Geun-hye, the nominee of the ruling Saenuri Party, recently raised the need for a regulatory mechanism against speculative capital flows, saying the introduction of a Tobin tax would be the most probable option. Officials of the main opposition Democratic United Party, who have usually preoccupied themselves with hitting the ruling camp over a range of issues, were quick to welcome the suggestion. A DUP lawmaker proposed implementing a two-tier tax system, under which the usual low rate of 0.02 percent could be raised up to 30 percent when the exchange rate fluctuates beyond the range of 3 percent. Aides to Ahn Cheol-soo, an independent presidential contender, have also supported introducing the tax.

 

Behind the enthusiastic embracing of the idea is apparently a desire to give voters the impression that the parties and the presidential candidates are coddling the national economy. But politics should be put aside in discussing the appropriateness of introducing the levy on foreign exchange transactions.

 

It is true that the won has appreciated against the dollar most steeply compared to other currencies in recent months. Its appreciation, however, has been driven by the country’s trade surplus and improvement in credit ratings as well as easing of monetary policy in the U.S., Japan and the eurozone. Some experts note it has yet to be seen whether the Korean currency, which breached a key resistance level of 1,100 won against the greenback last week for the first time in about 13 months, would go below 1,050 won and begin to hurt export competitiveness.

 

It should also be taken into account that the scheme has been enacted in few countries as even a small tax on financial transactions would drive business away unless everyone was in it together.

 

At the moment, the proper cure to negative effects from surging capital inflows seems to strengthen existing macro-prudential instruments, including tighter regulations on banks’ forward foreign exchange positions.