Lee Bok-hyun, Financial Supervisory Service Chief, Holds 'Risk Inspection Meeting' to Review Financial Market Trends

[Asia Economy Reporter Song Seung-seop] On the 28th, the Financial Supervisory Service (FSS) held a "Financial Market Risk Review Meeting" chaired by Director Lee Bok-hyun to assess financial market trends and prepare response measures.

The FSS is promoting a plan to procure foreign currency (dollars) overseas by utilizing foreign currency bonds held by financial companies. Although the foreign currency liquidity of the domestic financial sector remains stable despite deteriorating domestic and international conditions, this is to prepare for emergencies. When domestic banks borrow foreign government bonds from domestic insurance companies, they procure foreign currency funds in overseas markets using these bonds as collateral and supply foreign currency liquidity domestically.

The scale of U.S. Treasury bonds and international organization bonds held by major domestic financial companies amounts to $34.46 billion. This is 129.5% of the $26.62 billion in foreign currency funds procured by domestic banks last year through foreign currency bond issuance and medium- to long-term borrowing. Since both domestic banks and insurance companies can generate profits, there is an expectation that foreign exchange market supply and demand will stabilize through voluntary transactions by financial companies.

The liquidity risk of non-bank financial companies in Korean won is assessed to be improving in management. However, in preparation for the possibility of worsening financial market conditions in the future, the FSS plans to closely monitor management practices to enhance liquidity risk response capabilities.

Measures to reduce borrower burdens due to rising interest rates were also explored. Recently, the banking sector extended the sales period of "interest rate cap mortgage loan" products to reduce the repayment burden on borrowers with variable-rate loans amid steep interest rate increases.

The FSS plans to faithfully implement measures for financial stability, closely monitor market conditions, and seek timely supervisory responses in cooperation with related institutions.

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