People Power Party: "Lee Jae-myung, who mentioned reserve currency countries, could trigger a second IMF crisis"

"Imitating Major Currency Countries by Printing Money Could Cause Won Value to Plummet"
"Korean Won's International Usability Lower Than Thai Baht or Malaysian Ringgit"

[Asia Economy Reporter Naju-seok] The People Power Party expressed concerns that Lee Jae-myung, the Democratic Party presidential candidate's remark about a 'key currency country' is a dangerously reckless idea that could trigger a second IMF crisis.

On the 22nd, Heo Eun-ah, the senior spokesperson for the People Power Party, stated in a commentary, "Many citizens felt ashamed of the slogan 'competent economic president' while watching Candidate Lee's TV debate yesterday," adding, "Looking at how Candidate Lee approaches national debt and the key currency issue, it leads me to think he is a dangerously reckless presidential candidate who could cause a second IMF crisis."

[Image source=Yonhap News]

The candidate mentioned the day before, "There is a high possibility that we will soon become a key currency country." Regarding this, the Democratic Party explained that it was a citation of a press release from the Federation of Korean Industries stating that the Korean won could be included in the IMF Special Drawing Rights (SDR) currency basket.

In response, Spokesperson Heo criticized this as "ignorant." He said, "There is a significant difference between inclusion in the IMF SDR currency basket and the general meaning of a key currency," adding, "Such a simplistic citation cannot avoid criticism of economic ignorance."

He explained, "The five currencies included in the IMF SDR currency basket (dollar, euro, pound, yuan, yen) rank among the top five in international settlement shares. They are included in the currency basket because their international usability is large enough that there is no need to worry about a foreign exchange crisis, and they also enjoy seigniorage effects (profits from issuing currency)." He continued, "On the other hand, the Korean won does not even rank within the top 20 in international settlement shares. The won's international settlement share is still lower than that of the Thai baht or Malaysian ringgit."

Spokesperson Heo warned, "Although Korea has grown into a global economic powerhouse, the vulnerability of international finance remains an Achilles' heel," adding, "If we imitate a key currency country by printing money, it will not only fail to bring seigniorage effects but will cause the won's value to plummet, triggering an economic crisis, and in severe cases, it could lead to a second IMF crisis."

He criticized, "Saying that since there is a possibility of becoming a key currency country, we should print money to handle national debt is no different from baseless optimism that since the stocks I own might hit the jackpot in the future, I can go into debt now and consume," adding, "In yesterday's TV debate, Candidate Lee showed not a strong side in crisis but incompetence and ignorance that create crises."

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