Choo Kyung-ho and Yellen Agree on "Deepening Financial Instability, Activation of Liquidity Supply Mechanisms if Necessary"

Deputy Prime Minister Choo Kyung-ho Holds Conference Call with U.S. Treasury Secretary Yellen

[Asia Economy Sejong=Reporter Kim Hyewon] Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho reaffirmed that he and U.S. Treasury Secretary Janet Yellen are prepared to closely cooperate to implement liquidity supply measures if financial instability deepens among major countries, including South Korea.

According to the Ministry of Economy and Finance on the 1st, Deputy Prime Minister Choo held a conference call with Secretary Yellen at 8 p.m. on the 30th of last month. This conference call was arranged at the request of the U.S. Treasury Department, and it was the fourth official meeting between the finance ministers of South Korea and the U.S. since Deputy Prime Minister Choo took office.

The Ministry explained, "Amid increasing global economic uncertainty, the four intensive meetings held in less than 100 days were to share awareness of economic issues and reaffirm the will to cooperate."

Deputy Prime Minister Choo evaluated, "The fact that financial authorities meet frequently to discuss current issues itself demonstrates the solid Korea-U.S. cooperative relationship," adding, "We hope to deepen and develop economic cooperation based on bilateral (KORUS FTA) and multilateral (Indo-Pacific Economic Framework) cooperation foundations."

The two ministers shared the view on the current situation diagnosis that global real economy and financial market uncertainties are expanding due to global liquidity reduction and the prolonged Russia-Ukraine war.

Moreover, in a situation where additional downside risks such as the Russia-originated European energy crisis and emerging market debt sustainability issues are latent, they agreed to continue close communication and coordination between the two countries.

Deputy Prime Minister Choo emphasized that, amid tight global financial conditions posing considerable burdens on the Korean economy, the two countries should closely monitor recent financial and foreign exchange market trends and strengthen cooperation related to the foreign exchange market.

Deputy Prime Minister Choo and Secretary Yellen exchanged opinions on recent foreign exchange market trends and agreed that despite the sharp rise in the won-dollar exchange rate, the Korean economy still maintains sound external soundness thanks to a favorable foreign currency liquidity situation and sufficient foreign exchange reserves.

The two ministers reaffirmed their readiness to closely cooperate to implement liquidity supply measures if financial instability deepens due to the spread of liquidity crunches in major countries including South Korea, and agreed to continue related discussions.

Deputy Prime Minister Choo recalled the contents of a letter sent to Secretary Yellen two weeks ago, conveying concerns spreading mainly among Korea’s electric vehicle industry and the National Assembly over the Inflation Reduction Act (IRA) granting tax credit benefits only to North American electric vehicles, and requested Secretary Yellen’s special attention to resolving this issue between the two countries.

Secretary Yellen expressed deep gratitude for sharing Korea’s position and mentioned that the Korea-U.S. partnership will continue close cooperation.

The two ministers also exchanged broad opinions on the progress of the Russian oil price cap, support for developing countries’ climate change response through the Green Climate Fund (GCF), and the World Bank’s Pandemic Emergency Financing Facility (FIF). They agreed to continue cooperation between the two countries on global price stabilization and responses to climate and health issues.