Korea’s Economic Recovery
This global financial institution provided emergency loans to South Korea to stabilize its economy.
What is the International Monetary Fund (IMF)?
The crisis was worsened by capital flight and the rapid depreciation of this South Korean currency.
What is the won?
South Korea's currency depreciation during the 1997 crisis made its exports more competitive but also made this type of international obligation more expensive.
What are external debts?
The gold standard limited monetary flexibility because currencies were tied to this tangible asset.
What is gold?
As part of its crisis response, South Korea raised this economic tool to curb capital outflows.
What are interest rates?
This term describes the large business conglomerates in South Korea that were highly leveraged and contributed to the crisis.
What are chaebol?
South Korea holds a large amount of this asset as a buffer against financial crises.
What are foreign exchange reserves?
Exchange rates in most major economies today follow this system, where supply and demand determine currency values.
What is a floating exchange rate system?
Corporate sector reforms emphasized these two aspects of business governance to improve financial transparency.
What are transparency and accountability?
This regional phenomenon saw multiple Asian economies, including South Korea, suffer economic turmoil due to speculative attacks and financial instability.
What is the Asian Financial Crisis?
This trading strategy, which involves borrowing in a low-interest-rate currency to invest in a higher-interest-rate currency, affects the won’s exchange rate.
What is a carry trade?
The Bretton Woods system collapsed partly due to this country’s rising trade deficit and inflation.
What is the United States?
Korea expanded this type of government program to support unemployed workers during the crisis.
What is the social safety net?
The 1997 crisis in Korea was triggered by excessive reliance on this type of short-term debt.
What is external debt?
The two primary exchange rate mechanisms used in global trade are spot exchange and this type of future exchange agreement.
What is forward exchange?
Critics of the IMF argue that its bailout programs create this problem, where investors take excessive risks, assuming they will be rescued.
What is moral hazard?
By 1999, Korea's GDP growth had rebounded to an impressive percentage.
What is 10.9%?
A major cause of the crisis was the financial sector’s weakness, particularly due to a large amount of these.
What are non-performing loans?
The Korean won is classified under this type of exchange rate system.
What is a managed float?
Before 1973, the global financial system was based on this U.S.-centric monetary framework.
What is the Bretton Woods system?