I am very thankful to President George W. Bush for hosting this critical meeting.

The honorable international leaders who spoke yesterday evening and today proved to share the view that the serious financial crisis and stagnation of the real economy that the world is now experiencing are the most serious kind since the Great Depression of the 1930s.

Through a series of discussions, we came to know the cause of this crisis, and now it is incumbent for us to act accordingly.

What is important more than anything at this juncture is a close international coordination.

Today, industrialized nations and newly emerging economies are meeting at this G20 Economic Summit for the first time in a very timely and meaningful manner.

All eyes around the globe are on this meeting. This is a truly important event as it may give either hope or disappointment to the entire world depending on its outcome.

It would be ideal for this summit to deal with reform of the international financial system with a view to preventing a recurrence of a major global financial crisis; but obviously the time constraint precludes it. Instead, I believe that the priority for our discussions should be given to ways to stabilize the international financial markets and minimize damage to the real economy.

Considering the seriousness of the matter and interest of the entire world, I certainly hope we will be able to discuss substantive matters and produce an agreement that can be implemented.

In order to overcome the global financial crisis, it is crucial for individual countries to be assured of adequate financial liquidity first and foremost.

To this end, it is imperative that countries of the world cooperate and thoroughly carry out existing liquidity-bolstering measures while planning to take additional preemptive measures if necessary.

From the South Korea’s experience of a foreign exchange crisis from 1997 through 98, I can tell that the most impact can be expected when we take the necessary measures well in advance and in decisive and sufficient manner.

In order to cure the financial illiquidity expeditiously, we need to expand supply of foreign exchanges in individual countries.

Support should be increased to the emerging economies that suffer from a foreign exchange shortage.

In this connection, I would like to make two proposals as follows:

First, I have to mention the fact that the United States has recently offered currency swap lines in a very timely fashion toward South Korea and some other nations. Taking the cue from the United States, I propose that other major economies make a similar currency swap agreement with emerging nations and help them bolster foreign exchange liquidity. 

Second, it is true that the International Monetary Fund (IMF) failed to receive satisfactory evaluation from many emerging and developing countries in the past. But quite recently, the Fund has taken a very positive step to expand foreign exchange liquidity in counties of the world by installing the Short-term Liquidity Facility. In my thinking, it is essential for the IMF to boost its funds so that it can serve the needs of all the countries of the world, not just those represented in this summit. Therefore, I propose that measures be taken to expand financial resources of the IMF. Also from the experience of my country, a financial entity can maximize its effectiveness by actively implementing its credit guarantee programs, rather than using the money what it actually has. I propose that the IMF proactively study installing and expanding its credit guarantee system as well. I am thankful that I was able to discuss these issues briefly with the Managing Director of the IMF this morning.

Next, I must warn about the possibility that the global financial instability turns the real economy into stagnation, resulting in a simultaneous recession in many countries. Then the global recession would be deepened and prolonged. In a vicious cycle, the slack economy would further aggravate the financial situation.

In this connection, it was fitting and proper that major economies have taken active measures in recent months to stabilize the financial market by cutting interest rates and enhancing liquidity.

In addition to that, I hope to see G20 members coordinate their policies even closely and bolster counter-cyclical functions such as increase of fiscal expenditures.

In this respect, China and Japan deserve congratulations for drastically expanding fiscal outlays recently in an attempt to revitalize the economy. The President of the European Commission has just stated the European Union will take similar measures, too, and this is very encouraging, indeed.

I am glad to report that the Korean Government, too, has prepared a plan to increase spending and reduce taxes in the amount equivalent to 3.7 percent of the GDP.

Some countries may be apprehensive about the possibility that high spending rate would hamper the principle of sound fiscal planning. However, as the speakers before me stated, we should be reminded that the greatest impact can be expected when all the countries step up fiscal spending at the same time.

Budget appropriations may well place priority on creating jobs and protecting the socially vulnerable, thus expanding the social safety net.

Another important point I would like to make is that we have to be wary of a possible rise of protectionism in international trade in economically hard times.

One protectionist measure is likely to breed a series of other exclusive measures, turning the global economy into a deeper recession.

When that happens, the economically disadvantaged emerging nations will suffer the most.

Therefore, I urge all the participating nations to join in the “Stand-Still Declaration” that bans installing new barriers in trade and investment.

At the same time, I appeal to the international leaders here to take the lead in swiftly wrapping up the WTO DDA negotiations that have been in the doldrums for some time.

As you are well aware, there are about half a dozen major issues that need to be addressed for the sake of enhancing the international financial system. First of all, the financial markets should be made thoroughly transparent while the banking institutions should be held accountable for their actions. Second, the global community needs international codes and standards involving supervision of the financial industry while solidifying international cooperation in this regard. Third, there is a rising voice that credit rating agencies should be regulated somehow. Fourth, there is a need to establish international accounting standards. Fifth, more and more people argue that functions of the organizations like IMF, FSF and BIS, set up for international financial stability, should be redefined or strengthened.

On the domestic front, some countries are discussing ways to reform their financial supervisory organizations.

In the Republic of Korea, an integrated financial supervisory organization was established during the 1997-98 financial crisis out of the need to watch over the industry more efficiently. It has broad authority encompassing banks, securities firms and insurance companies. I hope to have feedback from other countries about the pros and cons about an integrated single supervisory organization.

Another point I want to make is procedural matter about implementing the agreements made at this summit. Proper implementation system will have to be established among the G20. However, as Brazil and Saudi Arabia suggested earlier, emerging markets as well as industrial economies should be represented in the process on an equitable basis.

As I conclude my remarks, it might be worthwhile to point out that historically, a system formulated during a crisis tends to go to extremes. New remedial measures should be conducive to normalizing functions of the market rather than restricting them.

I earnestly hope that when the international leaders here return home, the global markets will begin to regain trust and hope.

Thank you very much.