Lee Bok-hyun, Financial Supervisory Service Chief, Holds 'Risk Assessment Meeting' in Response to US Interest Rate Hike

Lee Bok-hyun, Governor of the Financial Supervisory Service

[Asia Economy Reporter Song Seung-seop] On the 16th, Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), held a financial market risk inspection meeting and ordered thorough management and supervision of the soundness and liquidity of financial companies. This was due to the significant increase in domestic and international volatility, such as the U.S. Federal Reserve (Fed) raising the benchmark interest rate by 0.75 percentage points at the Federal Open Market Committee (FOMC) meeting.

At the meeting attended by the Deputy Governor for Strategy and heads of eight departments, Governor Lee reviewed the trends in domestic and international financial markets and major risk factors after the FOMC and discussed countermeasures. Unlike past financial crises, Governor Lee judged that due to the prolonged COVID-19 pandemic, war, and tightening policies, the rise in interest rates and inflation is likely to continue for a considerable period.

Governor Lee instructed to thoroughly manage and supervise the soundness and liquidity of financial companies so that they can absorb internal and external shocks and perform their fund intermediation functions normally. He also urged active discovery of measures to alleviate the financial cost burden on financial users through regulatory innovation and improvement of unfair financial transaction practices.

Regarding the short-term financial market, the FSS plans to guide financial companies that are likely to face liquidity shortages proactively to expand liquidity based on stress test results. Additionally, as foreign exchange supply and demand conditions are deteriorating, the FSS will induce thorough management of foreign currency liquidity, focusing on vulnerable financial companies. In the real estate finance sector, the FSS will inspect overseas alternative investments by the non-bank sector, which has recently increased significantly, encourage the accumulation of reserves, and seek measures to ease financial burdens on self-employed individuals and others.

The FSS plans to implement financial stability measures without delay, closely monitor market conditions, and cooperate with related agencies such as the Financial Services Commission and the Ministry of Economy and Finance if necessary to respond appropriately.

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