Kim Juhyun, Financial Services Commission Chairman, "If the Chaean Fund cannot reach 20 trillion won, it may be increased further"

Financial Services Commission Chairman Kim Ju-hyun delivers a congratulatory speech at the '7th Financial Day Ceremony' held on the 25th at the 63 Convention Center in Yeouido, Seoul. [Image source=Yonhap News]

[Asia Economy Reporter Song Seungseop] Kim Juhyun, Chairman of the Financial Services Commission, hinted at the possibility of additional supply for the Bond Market Stabilization Fund (Cha-an Fund).

On the 25th, right after attending the ‘Financial Day’ ceremony at the 63 Convention Center in Yeongdeungpo-gu, Seoul, Chairman Kim met with reporters and said, “The problem now is that money is not circulating, but during the process of resolving this, the experts managing the Cha-an Fund will continue to increase it as needed,” emphasizing, “If 20 trillion won is not enough, we can increase it further.”

The government and financial authorities announced on the 23rd, after the asset-backed commercial paper (ABCP) non-repayment incident triggered by Legoland, that they would hold an ‘Emergency Macroeconomic Financial Meeting (Geum Meeting)’ and push forward market stabilization measures. The total scale is 50 trillion won, with the Cha-an Fund accounting for 20 trillion won. Since the day before, the financial authorities have been using 1.6 trillion won of immediately deployable Cha-an Fund resources to purchase corporate bonds or commercial papers of construction companies.

Chairman Kim explained, “It is difficult to solve market problems with only the government’s funds,” adding, “There are things that can be done through the Cha-an Fund, things that Korea Development Bank can do, and things that the private sector must do on its own.” He continued, “There are experts managing the Cha-an Fund accordingly, and depending on market conditions, we will execute funds as needed promptly.”

However, regarding the exact scale of execution, he said, “Liquidity will return soon from the Bank of Korea. There are too many variables such as how much will come in, whether the private sector will coordinate, and how external variables change,” adding, “There is no need to see how much the Cha-an Fund will inject tomorrow; we will do everything flexibly and elastically.”

In response to criticism that credit spreads did not fall the previous day, he replied, “Let’s keep watching the trend.” Credit spread refers to the interest rate difference due to credit risk, calculated by subtracting the treasury bond rate from the corporate bond rate. Chairman Kim said, “The important thing is that the financial sector and supervisory authorities are closely monitoring, and the Bank of Korea will soon hold a Monetary Policy Committee meeting to take measures, so it will definitely improve,” adding, “The government will also be more vigilant, monitor the market, and cooperate with related agencies to respond.”

When asked whether he had talked or met with Kim Jintae, Governor of Gangwon Province, regarding the Legoland guarantee issue, he said, “It was a fact we did not know before,” but added, “Afterwards, it was naturally discussed through various channels.” He also mentioned, “Didn’t Governor Kim say a few days ago that he would resolve it? I think there will be no more issues from the local government side at least.”

Regarding criticism that the government’s response was delayed, Chairman Kim said, “I have said it several times,” adding, “There was a schedule we expected in this situation, but the market situation was more serious than that. If you criticize that we missed it, I have nothing to say and I admit it.”

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