Lee Bok-hyun, Financial Supervisory Service Chief, "Continuous Monitoring to Prevent Abnormal Fund Concentration"

[Asia Economy Reporter Song Hwajeong] Lee Bokhyun, Governor of the Financial Supervisory Service (FSS), has instructed continuous monitoring to prevent abnormal fund concentration, considering the year-end peculiarities of the money market.

On the 15th, the FSS held a 'Financial Situation Review Meeting' chaired by Governor Lee to examine financial market trends and domestic and international risk factors following the U.S. Federal Open Market Committee (FOMC)'s interest rate hike.

Governor Lee stated, "The recent U.S. interest rate increase of 0.5 percentage points aligns with market expectations, but uncertainty remains regarding the final interest rate level." He added, "As the U.S. monetary tightening stance is expected to continue for a considerable period, the burden on domestic companies and households will increase, and financial system volatility may rise. We must prepare thoroughly for this."

Additionally, Governor Lee instructed ongoing monitoring to prevent abnormal fund concentration, taking into account the year-end characteristics of the money market. He emphasized, "To prepare for potential deterioration in economic and financial conditions, maintain a daily financial situation monitoring system, and promptly identify and thoroughly manage peculiarities by financial company, such as year-end movements in retirement pensions, reverse money moves, and excessive competition in fund procurement."

The FSS plans to closely monitor financial companies' fund procurement and management status and ensure they maintain sufficient liquidity to prepare for any contingencies. In particular, it will continue to monitor the second-tier financial sector to maintain a sound capital ratio and encourage capital expansion.

Furthermore, based on banks' credit risk assessments of small and medium-sized enterprises, the FSS plans to review the effectiveness of the credit system to support normalization for companies experiencing temporary funding difficulties.

[Image source=Yonhap News]