Vice Minister Ki Jae: "Increased Volatility in Government Bond Yields... Flexible Adjustment of Issuance Volume"

Macroeconomic and Financial Meeting

Kim Yong-beom, Vice Minister of Strategy and Finance, is speaking at the Macroeconomic Finance Meeting held at the Bankers' Hall in Jung-gu, Seoul on the 23rd. March 23, 2021. Photo by Yonhap News

[Sejong=Asia Economy Reporter Son Seon-hee] Kim Yong-beom, First Vice Minister of the Ministry of Economy and Finance, stated on the 23rd, "In addition to the impact of the global interest rate hike, concerns about the supply and demand burden of government bonds have also partially contributed to the rising interest rates," adding, "The government will flexibly adjust the issuance volume according to the supply and demand conditions of government bonds and movements in the yield curve."

Vice Minister Kim chaired the macroeconomic and financial meeting at the Bankers Hall in Jung-gu, Seoul, in the morning and said in his opening remarks, "If (interest rate) volatility expands, we will take thorough measures to stabilize the government bond market, including timely market stabilization actions in close cooperation with related agencies."

Recent volatility in the domestic financial market is analyzed to be a consequence of the rise in U.S. Treasury yields. Last week, the U.S. Federal Reserve (Fed) reaffirmed its existing accommodative monetary policy stance, including the scale of quantitative easing and maintaining zero interest rates for an extended period, at the Federal Open Market Committee (FOMC) meeting, but market uncertainty continues.

Vice Minister Kim said, "Last Friday, the Fed decided not to extend the supplementary leverage ratio (SLR) regulatory relief measure, contrary to some market expectations, causing the 10-year U.S. Treasury yield to temporarily exceed the psychological resistance level of 1.75%, resulting in continued instability," and analyzed, "Strengthened economic lockdown measures in Europe, U.S.-China conflicts, inflation and external debt burdens in some emerging countries are also emerging as additional factors of instability in the international financial market." He added, "We will pay special attention to domestic and international government bond market trends and strengthen monitoring."

Meanwhile, regarding the supplementary budget bill under review in the National Assembly, Vice Minister Kim said, "We will do our best to prepare in advance so that it can be promptly executed immediately after passing the National Assembly."

This content was produced with the assistance of AI translation services.