Vice Minister of Economy: "Emergency 2 Trillion Won Buyback of 5-10 Year Government Bonds on the 5th...Preemptive Measures if Volatility Expands Again"

Macroeconomic and Financial Meeting

Lee Ok-won, 1st Vice Minister of Strategy and Finance [Photo by Yonhap News]

[Sejong=Asia Economy Reporter Son Seon-hee] Lee Ok-won, the 1st Vice Minister of the Ministry of Economy and Finance, announced on the 4th, "Following the reduction of the issuance volume of short-term bonds (3-year bonds) by half compared to last October, we plan to conduct an emergency buyback worth 2 trillion won tomorrow (the 5th), focusing on medium-term bonds (5-10 years) which have recently experienced high volatility."

On the same day, Vice Minister Lee held a macroeconomic and financial meeting at the Bankers' Hall in Jung-gu, Seoul, stating, "Including the 2 trillion won buyback for maturity dispersion conducted the previous day, a total buyback of 4 trillion won will be carried out this week alone, which is expected to ease supply and demand conditions and improve market sentiment." He added, "If volatility expands again in the future, we plan to proactively implement market stabilization measures through active policy coordination with the Bank of Korea."

This emergency market stabilization measure was taken as the government bond market recently showed excessive volatility.

Regarding the announcement made the previous day (local time) by the U.S. Federal Reserve (Fed) at the Federal Open Market Committee (FOMC) regular meeting to start tapering asset purchases from this month, Vice Minister Lee predicted, "It is expected to be absorbed without major difficulties in the international financial market, and the impact on the domestic financial market will be limited."

However, he warned, "As countries, including the U.S. Federal Reserve, gradually shift their policy stance to normalization, there remains a possibility of increased financial market volatility if risk factors such as China's Evergrande Group and the U.S. federal government's debt ceiling negotiations overlap. If global inflation prolongs longer than expected, uncertainties surrounding the speed of global economic recovery and the monetary policies of each country may increase, potentially causing financial market instability."

In response, Vice Minister Lee emphasized, "We will closely monitor the progress of the Fed's tapering, the trends of major monetary authorities, and the global economic flow, and maintain thorough preparedness to swiftly stabilize the market if necessary."

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