It is still vividly remembered that the depletion of foreign exchange reserves drove the nation to the brink of collapse in 1997. The financial crisis, which put the nation under International Monetary Fund (IMF) management, was the outcome of the mismanaged foreign exchange policy, keeping the value of the won strong against the greenback. Although the crisis was quickly tided over but at the cost of hundreds of thousands laid off under hardship restructuring, its impact is still felt by the prolonged economic stagnation. In the midst of the economic slump, the nation has secured more than $200 billion, the fourth largest holding of foreign exchange reserves following Japan, China and Taiwan. Ironically, swelling foreign exchange holdings are drawing concern over their appropriate size. Though hard to tell the proper amount, many monetary experts suggest that it be kept at $140 billion-$150 billion, accounting for the 20 percent level of the Gross Domestic Products (GDP). The Bank of Korea is bent on securing more, saying that the present amount, registering 29 percent of the GDP, is not excessive in terms of the nation's economic scale. The central bank is of the opinion that the nation needs to improve its ability to pay off external debts, taking into account not just the experience of the financial crisis but also the geopolitical situation of the divided peninsula. In a certain sense, the central bank's position is plausible in consideration of external debts now amounting to $170 billion and foreign investments in the domestic stock market worth $160 billion, which can be withdrawn at any time. However, the government needs to address the problems that have come to light in increasing foreign exchange holdings. Last year alone, the increase amounted to $43.7 billion, most of which was secured through the government's intervention in the money market in order to prevent the value of the won currency from rising against the U.S. dollar. In particular, the issuance of monetary stabilization bonds amounted to 37 trillion won ($3.6 billion). So, their total outstanding dues have reached 143 trillion won, whose annual interests stand at a whopping 5 trillion won, enhancing the financial burden of taxpayers. The government maintains that increased foreign exchange reserves contribute to expanding profits in their management, which is mainly focused on buying U.S. treasury bills. But there are many economic analysts who are skeptical about the government's purchases of American bills because of the low value of the greenback in the global money markets. They say that as long as the value of the U.S. dollar stays weak, efforts to simply increase foreign exchange reserves are not desirable. Against this backdrop, the government needs to implement as early as possible a system to enhance the profitability in the management of foreign exchanges holdings, based on a thorough study concerning their proper level and operations.