Foreign Public Enterprises Withdraw Bond Investments... "Timely Response If Necessary"

Foreign Exchange Soundness Council Meeting on the 28th
Bang Gi-seon, Deputy Minister of Economy and Finance, "Close Cooperation Among Related Agencies"

Bang Gi-seon, the First Vice Minister of Strategy and Finance, is delivering opening remarks at the 'Foreign Exchange Soundness Council' held on the 28th at the Bankers' Hall in Jung-gu, Seoul.

Recently, it has been reported that bond investment funds are flowing out of overseas public institutions. The Ministry of Economy and Finance and related agencies have begun monitoring the situation and seeking countermeasures.

On the 28th, Bang Gi-seon, the 1st Vice Minister of the Ministry of Economy and Finance, chaired the first Foreign Currency Soundness Council of the year at the International Finance Center. This council meeting was held to strengthen cooperation among agencies responsible for managing macroprudential stability in the foreign currency sector, with officials from the Ministry of Economy and Finance, the Financial Services Commission, the Bank of Korea, and the Financial Supervisory Service in attendance.

On this day, the agencies discussed the causes of capital outflows from overseas public enterprises. Attending officials pointed to the weakening investment capacity of some public institutions and the reduction of arbitrage incentives as the causes of the situation. Vice Minister Bang stated that foreign bond capital outflows should not be excessively interpreted to avoid further volatility, emphasizing the need to strengthen market communication and respond promptly when necessary.

They also held in-depth discussions on foreign exchange supply and demand trends over the past two months. Factors affecting foreign exchange supply and demand, such as exports and imports, domestic investors' overseas investments, and foreign investors' domestic securities investments, were reviewed, and it was agreed to monitor closely to prevent any future imbalances in foreign exchange supply and demand.

Regarding foreign currency liquidity in financial institutions, amid increased volatility in global markets such as the recent strengthening of the US dollar this month, domestic banks, securities firms, and insurance companies were assessed to be maintaining stable levels of foreign currency liquidity.

Vice Minister Bang emphasized, “Changes in the international economic and political landscape, including the Russia-Ukraine war and China's reopening, will have a complex impact on our economy throughout this year,” adding, “Despite global risks, it is necessary for related agencies to closely cooperate in monitoring foreign currency fund inflows and outflows and supervising the foreign exchange soundness of financial institutions to maintain stability in the domestic foreign exchange and financial markets.”