The transition committee of South Korean President-elect Park Geun-hye is expected to study introducing a new tax on foreign currency exchanges in an effort to keep speculative foreign funds from disturbing the local foreign exchange market, an official said Monday.

Park’s campaign team had considered an introduction of what is known as the “Tobin Tax” as an election pledge, though the proposal was not adopted ultimately over concern it could be discriminatory.

Named after Nobel Laureate economist James Tobin, the tax is aimed largely at restricting hot money flows.

“If nothing is done with the steep rise in Korean won, it could lead to a speedier inflow of speculative money seeking exchange gains,” an official with the transition team said. “We need to discuss comprehensive foreign exchange market stabilization measures, including modifying the Tobin Tax, according to the Korean situation.”

The won has risen sharply recently, spurring concern that it could strengthen above the 1,000 won level against the U.S. dollar.

A stronger won would make Korean exports more expensive overseas and hurt exports, the main growth engine of South Korea’s economy.

Introduction of such a tax could also be considered as a way to increase tax revenues to fund welfare projects the incoming president has pledged. Given the size of South Korea’s foreign exchange market, a 0.01 percent tax on foreign exchange transactions could provide the government with about 2 trillion won in additional tax revenue. (Yonhap News)