As major countries of the world competitively ease monetary policies to boost their sagging economies, policymakers in Seoul are required to prepare steps to address their adverse effects on the Korean economy.

On Sept. 6, the European Central Bank announced a plan to purchase an unlimited amount of eurozone government bonds to lower eurozone countries’ borrowing costs and bring the region’s dragged-out debt crisis under control.

The ECB’s debt purchase scheme is tantamount to financing struggling eurozone governments, such as Spain and Italy, by printing money.

A week later, the U.S. Federal Reserve came up with a plan for another round of quantitative easing. The Fed said it would buy $40 billion worth of mortgage-backed securities on a monthly basis for an undetermined period.

The Bank of Japan followed in the U.S.’ footsteps. On Sept. 19, the bank expanded its asset purchase program by 10 trillion yen ($128 billion), boosting the total to 80 trillion yen. It said it would continue to purchase assets to ensure that financial conditions remain accommodative.

These ultra-loose monetary policies of the world’s largest central banks are designed to inject a massive amount of stimulus into financial markets to jump-start their stagnating economies.

Yet they have fueled concerns about a fresh global currency war as other countries would be compelled to take similar steps to prevent their currencies from appreciating too much.

For instance, the Brazilian finance minister, criticizing the advanced economies for harming emerging markets, warned Brazil would be forced to take measures to stop the real appreciation.

Brazil has recently decided to raise tariffs on about 100 goods to protect its domestic industries as imports from advanced countries have become cheaper due to their eased monetary policies.

Seoul officials also need to be on alert as capital inflows could surge, boosting the won’s value and increasing the volatility of domestic capital markets.

For the moment, the won has not appreciated much and financial markets remain stable. Yet officials should not let their guard down. They should keep a close watch on the developments of global financial markets as Korea remains highly vulnerable to capital flow volatility.

At the same time, the government should closely monitor the export environment as protectionism is on the rise around the world. It should exert efforts to curb protectionism as it would hurt Korean exporters who are already facing difficulties due to the continuing eurozone crisis and the slowing global economy.

Policymakers also need to boost domestic demand to pick up the slack stemming from a slowing export growth. They should step up efforts to reduce the economy’s excessive reliance on exports.