Early alarm index for currency crisis

Amid a heated debate over the possible recurrence of the foreign currency crisis, an early alarm index that warns of a potential outbreak of such a crisis in advance has been developed for the first time in the nation¡¯s history.

LG Economic Research Institute announced that it developed an `early alarm index for a foreign currency crisis` on July 31, based on variables closely related to the flow of foreign capital such as the level of highly evaluated currency values, currency defense capability and financial adequacy.

A researcher at LGERI said that when examining the trends of the currency crisis alarm indices, ¡°the nation¡¯s index sharply soared in the end of 1997 and has been on an upward curve again since the middle of last year.¡± But the chance of a foreign currency crisis recurring is not worrisome as of present, the local think tank diagnosed, since a significant number of local banks¡¯ loans are to households with a low insolvent rate, and there are few problematic variables.