Editorial: Korean rescue is only a start
The Morgan plan still has its supporters. 'I stick with the original problem we were given before Christmas, which was how to stop the outflow of funds and put some liquidity back simultaneously with the official side putting in some money,' says Pflug at Chase. 'The solution to that problem was the JP Morgan plan. The only flaw in the strategy was that it was not presented to the client - Korea - until much later. As things stand now (mid-February) we are in the process of stretching the maturities. But the extra official money has not gone in yet. Korea's reserves position has improved. But it is not up to the level originally called for.' Korea's forex reserves had reached $15 billion by mid-February. It needs to at least double that amount. Another banker says: 'We went over with the Koreans and with officials in Washington the risks of not raising new money. But in the end you cannot force people to borrow.'
Morgan and some other sympathisers among the international banks now present the Morgan plan as a useful first effort at drafting a proposal from which all the other banks could work.