Government: Domestic Banks, Securities, and Insurance Companies' Foreign Currency Liquidity Generally Stable

Bang Gi-seon, 1st Vice Minister of Economy and Finance, Chairs Foreign Exchange Soundness Council Meeting

[Asia Economy Sejong=Reporter Kim Hyewon] The government has assessed that the foreign currency liquidity of the domestic financial sector is generally at a healthy level.

On the 20th, Bang Gi-seon, the 1st Vice Minister of the Ministry of Economy and Finance, held the 'Foreign Exchange Soundness Council' at the International Financial Center to discuss the current status of foreign currency liquidity in financial institutions, risk factors related to the soundness of financial institutions due to recent exchange rate increases, and other issues.

The Foreign Exchange Soundness Council is a consultative body established in July last year to strengthen cooperation among related agencies responsible for macroprudential management in the foreign exchange sector, and this was its fourth meeting.

The government first reviewed the status of foreign currency liquidity in financial institutions. Despite increased volatility in the global financial market due to a significant expansion in expectations of interest rate hikes by the U.S. Federal Reserve, the foreign currency liquidity situation of domestic banks was assessed to be generally sound.

Additionally, the overall foreign currency liquidity situation of non-bank financial companies (securities and insurance companies) was also evaluated as not posing major problems.

Attending agencies agreed that, given the considerable uncertainty surrounding domestic and international conditions in the foreign exchange sector for the time being, they will conduct more thorough inspections of domestic financial institutions' foreign currency procurement and demand status, as well as foreign currency borrowing conditions.

They also discussed the potential risks to the soundness of financial institutions that could arise from increased exchange rate volatility. The related agencies decided to keep all possibilities open, carefully examine potential risk factors, and seek response strategies through active communication with the market.

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