Kim Jong-hwa, BOK Monetary Policy Committee Member, "Exchange Rate Level High, Financial Firms Must Manage Liquidity"

Bank of Korea Financial Stability Report Announcement

Kim Jong-hwa, Member of the Monetary Policy Committee, Bank of Korea

As the exchange rate surged, there were calls for financial institutions to proactively manage liquidity risks.

On the 24th, Kim Jong-hwa, a member of the Monetary Policy Committee of the Bank of Korea, released the Financial Stability Report and stated that although the Bank of Korea and the government swiftly implemented market stabilization measures in response to domestic political uncertainties in December, uncertainties in both domestic and external conditions are expected to persist for the time being.

Kim emphasized, "In a situation where the exchange rate level has risen, it is necessary to guide financial institutions to manage capital and liquidity at appropriate levels while striving to maintain strong resilience in the external sector."

He added, "While a relaxation in the degree of monetary policy tightening will contribute to reducing financial instability such as credit risk, there is a possibility that it could expand financial imbalances in the medium to long term. Therefore, an appropriate combination of monetary policy and macroprudential policy will be even more important going forward."

He continued, "Attention should be paid to the accumulation of insolvencies among self-employed individuals and marginal companies, as well as potential risks in vulnerable sectors such as real estate project financing (PF). Selective financial support and orderly restructuring should be continuously pursued."

Furthermore, he stated, "In the medium to long term, it is also necessary to explore measures such as the downward stabilization of household debt leverage and the easing of loan concentration in the real estate sector."

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