[Financial Institutions to Buy All Non-Performing Loans by January Next Year]
[Shinsegi Investment to Be Suspended Starting Tomorrow]
[Government Guarantees Up to $20 Billion in Bank Foreign Loans]
[Corporate Liquidity Crisis Likely to Cause Major Tax Revenue Shortfall This Year]
[Won Falls Sharply Despite IMF Deal – Dollar Nearing 1,700 KRW]
[IMF Demands Merger of Finance, Securities, and Bank Regulatory Bodies]
[IMF Loan Rates May Rise by 2–4 Percentage Points]
[South Korea Emerges as the World's No. 1 Debtor – $200 Billion in Foreign Debt]
[Currency Market Sees Relentless Surge]
[Corporate Bankruptcies Cause Record High Unemployment This Year]
[When Will the Currency Market Stabilize?]
Since the onset of the foreign exchange crisis, the lights in the Ministry of Finance and Economy had not been turned off a single night.
Despite all their efforts to resolve the situation, things only kept deteriorating.
"The note default rate hit a record high of 7.23% today. Also, Elcanto and Haean Pharmaceuticals filed for bankruptcy, bringing the total number of bankrupt companies this year to 230."
As depressing reports piled up, Choi Jin-woo, the Deputy Minister for Economic Affairs— haggard and sleepless for days—spoke in a dry, exhausted voice.
"The number of bankruptcies is also the highest ever recorded."
Deputy Minister Shin Seung-ki, seated on the sofa to the left, responded in an equally weary tone.
"The crisis among investment finance companies and securities firms is now affecting the banks that lent them money. But more critically, the string of corporate bankruptcies has caused a massive spike in non-performing loans, and that's becoming a serious problem."
"Last I heard, the confirmed amount of bad loans from banks and investment firms exceeded 32 trillion won, right?"
"Yes. As a result, banks are struggling to meet their BIS capital adequacy ratios. They've halted new lending altogether and are now scrambling to recall existing loans, which has dried up liquidity in the market even further."
Feeling suffocated, Deputy Minister for Economic Affairs Choi Jin-woo let out a sigh before he realized it.
"It's a vicious cycle, plain and simple."
With a grim expression, Deputy Minister Shin continued.
"What's worse is that after Shilla and Seonam Securities, now even Shinsegi Investment has gone under. There's a growing fear in the market that this could trigger a full-blown financial meltdown."
"..."
"Banks and securities firms alike are in a frenzy to secure cash. Call money transactions have all but come to a halt, interest rates are skyrocketing, and if this continues, the entire financial system could grind to a halt."
"What's the current market interest rate?"
"It's soared to 30% per annum."
"Mmm."
Choi let out a low groan, furrowing his brow.
"That's practically at a level where loans are impossible."
In a gloomy voice, Shin added more.
"And to make matters worse, the exchange rate keeps surging, putting even more pressure on us."
"I heard we nearly broke 1,700 won per dollar today."
"Yes. Once the intraday resistance level was breached, the Bank of Korea had to intervene immediately to barely push it back below 1,700."
"We must've burned through more precious dollars."
"There wasn't much choice. If we had left it alone, speculative forces would've driven the rate much higher."
Hearing that, Choi Jin-woo shook his head weakly.
"I'm not blaming you. I'm just… frustrated."
He swallowed a sigh and asked,
"So, how much foreign reserve do we have left now?"
At that, Deputy Minister Shin Seung-ki hesitated for a moment before answering.
"It's just under 8.8 billion dollars."
"Haah…"
Overwhelmed by the dire situation, Deputy Minister for Economic Affairs Choi Jin-woo leaned back in his chair and ran a hand through his hair.
"It feels like my blood dries up a little more every day."
"We've requested early disbursement of the pledged support funds from the IMF, IBRD, and ADB. If that goes through, it might buy us some breathing room."
But Choi Jin-woo's expression didn't brighten in the slightest.
"Even if they agree—which is uncertain—we're only talking about a maximum of 8.5 billion dollars. That's barely enough to put out the fire right in front of us."
Deputy Minister Shin, well aware that the amount was far from sufficient, could say nothing in response.
Seeing Shin lower his head and bite his lip, Choi Jin-woo's expression hardened.
"No matter how many dollars we scrape together, if they keep draining away like water from a bottomless pot, it's meaningless. We need a fundamental solution—something that can fully resolve this crisis."
But he, too, couldn't think of a decisive fix.
Choi Jin-woo let out a grim sigh and muttered bleakly,
"It feels like we're trapped in a swamp, just flailing around."
If there were even a single straw to grab, he would've clung to it—but none could be seen.
Holding his aching head, Choi Jin-woo pressed his fingers to his temple and spoke.
"If there's nothing else to report, you may go."
"Yes, sir."
Deputy Minister Shin stood, collecting the file folder he'd placed on the table.
Moments later, as the door closed behind him, Choi Jin-woo sighed again and habitually reached for his cigarette pack.
Since becoming the Deputy Minister, his smoking had doubled—he was probably going through two packs a day now.
Seeing that even the cigarette pack in his hand was empty, Choi Jin-woo scowled.
"Damn it."
He crumpled the empty pack in his fist and tossed it into the wastebasket beneath the desk, then held his forehead and muttered.
"Nothing ever goes right."
Just as he reached for the intercom to call in his secretary, the vibration of his phone startled him.
Pulling it from his pocket, Choi glanced at the caller ID and immediately answered the call.
"President Park. What brings you to call?"
[How have you been? I hope I'm not disturbing you at a busy time.]
Deputy Minister Choi Jin-woo, leaning back into the plush sofa, gave a bitter smile.
"To be honest, I haven't been doing well."
[You must be under a great deal of stress with the continued wave of bankruptcies from financial institutions and corporations.]
"That too, but the biggest headache is the exchange rate. I'm sure you heard it broke 1,700 won to the dollar during today's trading."
[There's still a lot of unease in the market, and with the currency speculators returning, it doesn't look like the rate will come down anytime soon.]
"It's gotten to the point where I can barely sleep at night."
Choi Jin-woo thought that ever since he'd taken this position, his health had likely deteriorated by a good ten years.
His smoking habit had worsened, and now he suffered from insomnia. At this rate, it wouldn't be surprising if he dropped dead from stress and overwork.
"You backed us by purchasing foreign exchange stabilization bonds and providing a massive $10 billion, yet the situation seems to have worsened rather than improved. I feel ashamed to face you."
[You did everything you could, but the circumstances haven't been favorable. There's no blame to place.]
"That's oddly comforting to hear."
Seeming a bit more relaxed, Choi Jin-woo's stern expression softened.
"I'm guessing you didn't call just to check in. Tell me what's on your mind."
At that, Seok-won's tone turned serious, shedding its previous warmth.
[If my estimates are correct, your usable foreign exchange reserves should have dropped below $10 billion by now. Am I wrong?]
It was a sensitive question. Choi Jin-woo remained silent for a moment before replying in slightly stiff voice.
"I'm sorry, but I can't answer that."
Although he didn't confirm it outright, Seok-won could easily infer from the response that his assumption was correct.
[Of course. I also heard you're in negotiations to bring forward the disbursement of support funds from the IMF and other international institutions like the IBRD and ADB.]
Choi Jin-woo was startled to hear how thoroughly Seok-won seemed to know the Ministry of Finance's internal moves.
Then he remembered—Seok-won was the owner of Eldorado Fund, a powerful figure even on Wall Street. With that in mind, he decided there was no point in denying it.
"That's right. As expected, you're well informed."
[Even if the negotiations go smoothly and the second round of support funds arrives before year's end, it still won't be enough to stabilize the foreign exchange market. Oh, it's better than nothing, of course.]
Hearing Seok-won pinpoint exactly what he himself had been worrying about made Choi Jin-woo flinch internally.
Still, he showed no outward reaction and kept listening as Seok-won continued.
[Even if you manage to bring in more foreign capital, like with the first round of support, it'll likely just end up lining the pockets of currency speculators or be used by foreign investors fleeing Korea.]
Choi Jin-woo responded in a slightly defensive tone.
"But we can't just sit on our hands and do nothing."
[True. But if this vicious cycle continues, all that's going to happen is that speculators get richer while the Korean people are saddled with massive losses from the currency crisis.]
The support funds from the IMF, other international financial institutions, and foreign governments were, of course, not given freely.
They were all loans, meaning interest had to be paid and the entire amount repaid later.
That's why there were growing concerns that once all the bailout money came in, Korea's foreign debt would balloon to $200 billion, making it the world's largest debtor nation.
Even if it was unavoidable that foreign financial firms and investors pulled out their funds, it was infuriating that huge amounts of dollars, which the government—or rather the people—would have to repay in the future, were being snatched away by currency speculators.
"I'm not at ease about it either."
But what could be done?
As a helpless expression began to spread across Deputy Minister Choi Jin-woo's face, Seokwon's clear voice suddenly cut through.
[In times like this, the best solution is to completely break the game all at once.]
"What?"
Choi Jin-woo narrowed his eyes, holding the phone to his ear.
[I have a way to change the game. Are you interested?]
It was as if a straw of hope had suddenly been grasped by his desperately struggling hands.
Widening his eyes, Choi Jin-woo sat up straight.
"Is that really so?"
[You know well I don't talk nonsense.]
Choi Jin-woo swallowed dryly and urgently asked,
"Tell me, what method is it?"
***
December 2, 1997.
Before the foreign exchange market opened, the trading floor at the Foreign Exchange Bank was engulfed in a heavy tension.
Amid ongoing financial instability and a cascade of corporate bankruptcies, foreign investors continued to withdraw funds. Failure to roll over short-term foreign debt intensified fears that Korea was once again heading toward a sovereign default crisis.
The exchange rate, which had been climbing steeply, surged over 200 won in just three days, threatening to break through 2,000 won—amplifying the anxiety.
Deputy Manager Na Un-hak, sporting a scruffy beard from skipping his shave, stared grimly at the monitor before him.
Everyone instinctively sensed the looming crisis, and the entire trading floor was filled with taut tension, like a drawn bowstring ready to snap.
Next to him, Seol Kyung-sik shifted nervously, his eyes darting about like a restless puppy. In a low voice, he asked,
"Surely, it won't cross 2,000 won today, right?"
"I hope not… but given the market mood, you better brace yourself."
Seol Kyung-sik's face darkened further, hoping for a lie that it wouldn't pass the mark.
"If the exchange rate hits 2,000 won per dollar, wouldn't that mean the country's done for?"
Na Un-hak stayed silent, offering no answer.
Seol Kyung-sik's eyes flickered anxiously, unsettled by the silence.
"Senior…"
"It's going to be a tough day. Stay sharp."
Na Un-hak said in a low, heavy voice, never taking his eyes off the monitor for even a second.
Soon after, a loud alert rang out as the foreign exchange market opened and trading began.
[USD/KRW: 1,960.11 (+53.43)]
The first trade came in at 1,960 won — a jump of 53 won from the previous day. Shocked, curses and groans burst out across the floor.
"Crazy!"
"Unbelievable…"
"Damn it! At this rate, we're really going to break 2,000 won."
Everyone on the trading floor stared blankly at the large ticker displaying the won-dollar rate, stunned.
Just earlier this year, the exchange rate had been below 1,000 won, and now it was creeping close to 2,000—a catastrophic disaster.
Though Na Un-hak had braced himself, seeing the rate soar to 1,960 made him dizzy and dazed.
He could do nothing but stare at the screen.
The exchange rate that started at 1,960 won rapidly surged to a terrifying 1,990 won within minutes.
The market was gripped by sheer panic as everyone scrambled to dump won, and no one wanted to buy.
In less than an hour since trading began, even the last defensive barrier of the 2,000-won mark per dollar was breached.
[USD/KRW: 2,067.01 (+160.33)]
Seok-won, seated at his desk in the president's office, watched the numbers closely. He picked up his phone and dialed.
After a few rings, Landon's voice came through.
[Speak, boss.]
"Begin."
[Understood.]
Seok-won ended the call after the brief order and stared coldly at the exchange rate ticker on the monitor.
"They're probably raising their glasses to celebrate right now, but soon that cheer will turn into screams."