Lee Jae-myung: "Insurance Companies' Non-Exercise of New Capital Securities Call Options Requires Preemptive Measures"

"Risk of Spillover to Bond Market... Liquidity Crisis Materializes as Money Market Freezes"

[Image source=Yonhap News]

[Asia Economy Reporter Koo Chae-eun] Lee Jae-myung, leader of the Democratic Party of Korea, said on the 6th regarding Heungkuk Life Insurance's new capital securities 'early redemption (call option) non-exercise,' "We must prepare preemptive measures assuming a chain default situation and anticipate where and how collapses might occur."

Lee stated on Facebook that "In addition to the 'Kim Jin-tae triggered financial crisis,' the recent waiver of Heungkuk Life Insurance's call option has further frozen the capital market, making the liquidity crisis a reality."

He added, "While Heungkuk Life Insurance's waiver of the call option is a rational choice from the company's perspective, the trust that the money would be repaid after five years has been broken, which could spread sparks throughout the bond market. This is a crisis like thin ice where even a single falling leaf can cause a collapse, so patchwork measures cannot overcome it."

He continued, "The current capital market tightening is one aspect of a complex crisis caused by intertwined economic factors such as interest rates, inflation, and exchange rates," and pointed out, "It is clear that responding one by one whenever the dam breaks has its limits."

He also argued, "The Bank of Korea is raising interest rates to control inflation, but inconsistent government policies that supply liquidity to the market cannot go beyond short-term measures."

Lee emphasized, "We must remember that the government's complacent and delayed response, which said 'nothing serious will happen' despite repeated signs and signals of crisis, caused the past IMF national crisis," and added, "The government should sincerely come together with an 'all-in economy' national policy to overcome the crisis."

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