Beginning with filing of bankruptcy of Lehman Brothers investment bank in September 2008 caused by the sub-prime mortgage crisis in United States, the liquidity crisis in the international financial market really started. The crisis rapidly spread and developed into a global economic shock, resulting in an extensive recession of the world economy. Governments in even the wealthiest nations had to come up with rescue packages to bail out their financial systems.


Along with advanced countries the Korean government supplied sufficient liquidity with financial institutions and in particular, announced guarantee of bank's external liabilities to prevent the credit crunch. In addition to the package, the Korean government launched, extensive fiscal plans, a revised budget in 2008 and a revised supplementary budget in 2009 to curb economic slump. In order to tide over current recession the Korean government should strive to operate more active policy measures: financial support for the small businesses, practical aid for people in poverty, and strengthening social safety net