Koh Seung-beom, Financial Services Commission Chairman, "Concerns Grow Over Increased Volatility in Korean Financial Market in February"

US Consumer Price Index Soars
Increased Likelihood of Russia's Invasion of Ukraine

Downside Economic Risks and Financial Imbalance Risks 'Mutually Reinforce Each Other'

[Asia Economy Reporter Sim Nayoung] On the 14th, Ko Seung-beom, Chairman of the Financial Services Commission, stated at the Financial Market Inspection Meeting and Executive Meeting of the Financial Services Commission, "Since there is a possibility that domestic and international financial market volatility may expand again following January, thorough monitoring and preparedness must be continuously maintained," adding, "Last Friday, the U.S. stock market experienced a significant correction, and volatility in our stock market is also expected to increase this week."

The U.S. Consumer Price Index (CPI) for January, announced last week, was 7.5%, marking the highest level in 40 years. Concerns among countries about the possibility of Russia's invasion of Ukraine have also significantly increased over the weekend. Chairman Ko said, "especially the Ukraine issue is highly uncertain in terms of future developments, so it requires close attention," adding, "please review the scenario-based action plans once again to minimize market shocks in case of emergencies."

He continued, "Since downside risks to the economy and financial imbalance risks can mutually reinforce each other, we must closely examine the economic and financial situation." The downside risk factors include the continued spread of COVID-19 variants, global inflation concerns, international political instability, and prolonged supply chain disruptions. Financial imbalance risks include increased debt and rapid asset price rises, accumulation of potential default risks, and global liquidity shifts due to tightening.

He said, "As global liquidity has increased unprecedentedly, the start of global tightening may bring changes in economic and financial conditions that we have never experienced before," adding, "we will carefully monitor key risk areas such as household debt, self-employed debt, and non-bank sector risks, and take necessary preemptive measures."

He further stated, "The financial sector must not fall into the mistake of overlooking or underestimating risks faced by being obsessed with short-term profit pursuit," adding, "households and businesses should check their financial status to see if they can withstand the shock of rising interest rates and reduce excessive leverage."

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