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Tensions in the banking sector remain high as unions continue to push ahead with strike preparations and the government vowing to use all means necessary to break the strike.

However, bank unions appear to have retreated somewhat from some of their previous threats, aware that public opinion is largely against the strike action. In response, the government has promised to attempt to avert a strike situation through all channels possible, so it looks like the worst-case scenario may be avoided.

If the strike in the financial sector goes ahead as planned on July 11, banks will remain open but it is likely customers will face some inconveniences.

The banks will be placing non-union contracted workers and managers above the rank of assistant director at bank windows in place of the tellers on strike. However, these non-union and management workers account for just 20 percent of the total work force to go on strike and as the replacement workers will be unfamiliar with the systems, the waiting time at banks will increase considerably. Customers are advised to use ATMs, do their banking over the phone or by Internet.

A nightmarish scenario will present itself if computer systems for the striking banks fail. It will be impossible for customers to withdraw or deposit money at bank windows or pay bills at banks. Banking through electronic means will also be impossible. Sending funds to striking banks will be equally inadvisable and because all trade of notes will be stopped, the chance of a 'domino effect' of companies going bankrupt is also not insignificant.

The worst-case scenario would arise if the central computer system malfunctions or if computer systems for all the banks fail, and would constitute a disaster for Korea's financial sector. However, the possibility of this occurring is very slim because Korea Financial Telecommunications and Clearings Institute (KFTC) and all banks have emergency back-up plans to keep the computer systems up and running.

The Bank of Korea is taking precautions by ensuring there is plenty of cash on hand in case customers wish to withdraw funds prior to the strike date. Meanwhile, the KFTC will extend the expiration time for bills to be cashed to ensure companies don't go unpaid. Currently, bills have to be cashed by 2:30 pm and the time limit for recording unsettled bills and bankruptcies is 4:30 pm.

There are also plans to exempt the trading of bills and checks issued by the banks on strike from normal business, to protect companies from going bankrupt due to the strikes.

If the strikes escalate and computer systems falter, the government will simply have to ask for public understanding. Companies that are starved of business due to the strikes should be protected and those unable to pay bills on time should be exempted from arrearage charges.