Global financial crisis: background, prospects, and its impacts on Korea

Abstract

The global financial system is going through turmoil triggered

by the subprime mortgage crisis in the United States. Severe

adjustments befell all sorts of financial markets, and financial

institutions are very vulnerable to potential shocks from deteriorating

economic conditions. This paper briefly recaps the ongoing

global financial crisis and its impact it has had on Korean financial

markets and economy. It also comments on some issues of crisis

management strategies in the short-run, including bailouts and

coutercyclical macroeconomic policies. Lastly, from a long-term

perspective, it proposes an appropriate policy direction for preventing

and managing future crises.