Son Byung-du, Vice Chairman of FSC, "Contingency Plan to Activate if Market Instability Expands"

Son Byung-du, Vice Chairman of the Financial Services Commission, is delivering opening remarks while presiding over a financial situation review meeting at the Government Seoul Office Building on the 28th.

[Asia Economy Reporter Kangwook Cho] The Financial Services Commission (FSC) has decided to activate a contingency plan if market instability expands due to the spread of the novel coronavirus. In particular, it announced plans to intensively monitor various unfair practices such as the dissemination of false information and market manipulation that exploit market anxiety.

On the 28th, the FSC held a financial situation review meeting at the Government Seoul Office to assess the impact of the novel coronavirus spread on domestic and international financial markets and announced these measures.

The meeting was attended by FSC Vice Chairman Byungdoo Son, Director of the Financial Policy Bureau Birose, Capital Market Policy Officer, Vice Chairman of the Financial Supervisory Service, Head of the Korea Exchange, Vice President of the Industrial Bank of Korea, Director of the Korea Credit Guarantee Fund, Vice Chairman of the International Finance Center, Executive Director of the Korea Financial Investment Association, and economists from securities firms.

In his opening remarks, Vice Chairman Son said, "As the novel coronavirus rapidly spreads, concerns about the domestic and international economy and financial markets are increasing. Since last week, the preference for safe assets has strengthened, causing stock prices and interest rates in major countries to fall, and volatility in global financial markets is also expanding."

On the day, the KOSPI fell by 3.1%, and the exchange rate rose by 8.0 won (0.7%). Major countries' stock prices, including Japan (-0.55%) and Australia (-1.45%), also declined together. Additionally, major European countries such as the United States (-1.57%), the United Kingdom (-2.29%), Germany (-2.74%), and France (-2.68%) experienced significant stock price drops. The Chinese stock market was closed due to the Lunar New Year holiday.

Vice Chairman Son stated, "Due to the preference for safe assets caused by risk spread and uncertainty about economic impact, the domestic financial market is likely to show volatility for the time being. However, there is no need for excessive concern as we hold excellent external soundness, including record-high foreign exchange reserves and net external claims."

As a future response plan, he said they would strengthen a 24-hour monitoring system to stabilize the financial market and closely monitor difficulties faced by companies in related sectors such as tourism, ensuring that prompt financial support can be immediately implemented if necessary by utilizing already established response systems such as the Japan Export Regulation Task Force and the Financial Market Team.

Vice Chairman Son also emphasized, "Since various unfair acts such as the dissemination of false information and market manipulation exploiting market anxiety can cause losses to general investors, it is necessary to cooperate with related institutions such as the Financial Supervisory Service and the Korea Exchange to closely monitor for any suspicious movements in the market."

Regarding recent redemption suspensions caused by liquidity problems at some private equity fund management companies, he said, "It is undesirable to amplify market anxiety about fund liquidity. Going forward, excessive concentration should be avoided through cooperative relationships among market participants such as securities firms and asset managers."

Quoting the Go (baduk) crisis tenets, specifically 'Shinmul Gyeongsok (愼勿輕速),' which means not to rush recklessly but to think carefully, Vice Chairman Son urged, "The outbreak and spread of the novel coronavirus are uncertain factors for the domestic and international economy and financial markets, but at times like this, rather than excessive anxiety and fear, a cool-headed analysis and review of the actual impact are necessary."