Gov't to inject 2.8 tln won to prop up short-term money market

credit crunch-support

Gov't to inject 2.8 tln won to prop up short-term money market

SEOUL, Nov. 11 (Yonhap) -- South Korea's financial regulator said Friday it will inject more than 2.8 trillion won (US$2.1 billion) in liquidity to prop up the short-term money market and ease worries over a credit crunch.

The money will be pumped into the project-financing asset-backed commercial paper (PF-ABCP) market roiled by the fallout from a debt default linked to the Legoland theme park construction in the eastern province of Gangwon, according to the Financial Services Commission (FSC).

Under the plan, over 1 trillion won will be provided to purchase builders-guaranteed PF-ABCPs through CP-buying programs of the state-run Korea Development Bank and the Korea Credit Guarantee Fund.

About 1.8 trillion won will also be injected for brokerages-backed PF-ABCPs, the FSC said.

The decision is the latest in a series of steps the government has unveiled to stabilize the debt market in the wake of the Legoland debacle and soaring worries over a credit crunch.

The government earlier decided to inject at least 50 trillion won in liquidity into the debt market mostly through bond-buying schemes. It also urged local banks to minimize bond selling as part of market stabilization efforts.

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