Choi Sang-mok "Additional Liquidity Measures for Timf Incident... Preparing Institutional Improvement Plans"

The Macroeconomic Financial Meeting, where financial authorities' leaders discuss South Korea's macroeconomy, was held on the 1st at the Bankers' Hall in Seoul. Choi Sang-mok, Deputy Prime Minister and Minister of Economy and Finance, is delivering the opening remarks. From left to right: Lee Bok-hyun, Governor of the Financial Supervisory Service; Lee Chang-yong, Governor of the Bank of Korea; Deputy Prime Minister Choi; and Kim Byung-hwan, the newly appointed Chairman of the Financial Services Commission. Photo by Heo Young-han younghan@

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The government stated that it will respond with caution to the differentiation in monetary policies among major global countries and the potential increase in market volatility following the Federal Open Market Committee (FOMC) decision to hold the policy interest rate steady. Regarding the Timon and Wemakeprice incidents, the government announced that it will consider additional liquidity support measures if necessary and review institutional improvements.

On the 1st, Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok held a joint 'Macroeconomic and Financial Meeting' with related agencies at the Federation of Korean Banks building. Attendees included Lee Bok-hyun, Governor of the Financial Supervisory Service, Lee Chang-yong, Governor of the Bank of Korea, and Kim Byung-hwan, Chairman of the Financial Services Commission. The meeting reviewed the impact of the FOMC's decision to hold rates steady, announced earlier that day in Korean time, on domestic and international financial and foreign exchange markets and discussed response strategies.

At the FOMC meeting held overnight, the Federal Reserve Board (Fed) unanimously decided to hold the policy rate steady again at 5.5%, but strengthened signals for future rate cuts. In its statement, the Fed noted a slowdown in employment growth and progress in inflation assessment, delivering a more dovish evaluation than expected.

Fed Chair Jerome Powell revealed that there was discussion about initiating rate cuts at this meeting and stated that if conditions such as continued inflation slowdown are met, a rate cut in September is possible. He indicated that rate cuts are approaching, showing a dovish stance. Meanwhile, the Bank of Japan (BOJ) raised its benchmark interest rate to 0.25% with an additional hike after four months.

Deputy Prime Minister Choi said, "Global financial markets generally viewed the meeting's outcome as accommodative and remained relatively stable," adding, "However, uncertainties remain regarding the timing and magnitude of rate cuts by major countries, so we will respond with high vigilance under cooperation among related agencies."

Choi evaluated, "The domestic financial market has been relatively stable recently, with continued foreign buying in the stock market and smooth issuance of corporate bonds in the money market." However, he emphasized, "Given the resurgence of geopolitical instability in the Middle East and uncertainties such as the U.S. presidential election, we will closely monitor related developments and respond promptly according to contingency plans if necessary."

Risks such as household debt and real estate project financing (PF) will also be thoroughly managed. Choi stated, "We will implement Stress Debt Service Ratio (DSR) Phase 2 as scheduled from September and improve the interest rate calculation system for housing policy finance, which has recently shown rapid growth, within a range that does not disrupt genuine demand."

He explained, "Real estate PF is undergoing a soft landing within a predictable and manageable range since the May measures were announced," adding, "Supervisory authorities received the first business feasibility results from financial institutions in early July and plan to finalize follow-up action plans by the end of August."

Regarding the Timon and Wemakeprice incidents, he said, "We will promptly execute the already announced support measures amounting to at least 560 billion KRW to minimize damage to consumers and sellers, and consider additional liquidity support measures if necessary," adding, "We will also review the adequacy of the Electronic Commerce Act and the Electronic Financial Transactions Act and promptly prepare institutional improvement measures."

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