There is a risk that, in a period of market disruption when ETF investors want their money back, managers would be forced to recall such loans, adding to liquidity pressures.

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It does not take a long memory to recall how in 1992 the central bank supplied 2.9 trillion won in special loans to three big investment trusts (South Korean mutual funds).

ECONOMIST: South Korean banks: First and worst | The

And recall, no one has made any money here (well, except those who have defaulted on their loans) and no one has even charged any profit.

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