Choo Kyung-ho "Financial instability grows... Financial sector must enhance loss absorption capacity"

Emergency Macroeconomic and Financial Meeting

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho stated on the 23rd, "As the global economy adapts to a new environment of high-intensity monetary tightening after a prolonged period of low interest rates, we cannot rule out the possibility of renewed global financial market instability, such as the crisis among U.S. small and medium-sized banks, and an expansion of uncertainty in the real economy."

On the same day, Deputy Prime Minister Choo made these remarks while presiding over an emergency macroeconomic and financial meeting at the Seoul Federation of Banks building.

Deputy Prime Minister Choo said, "We will work closely with relevant agencies to thoroughly manage potential risks in financially vulnerable sectors such as marginal companies, vulnerable real estate businesses, and multiple debtors, to prevent these risks from materializing amid market instability." He added, "The financial sector itself also needs to enhance its loss absorption capacity by thoroughly managing risks in preparation for uncertainties, as well as by sufficiently provisioning reserves and expanding capital."

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho is delivering opening remarks at the Emergency Macroeconomic and Financial Meeting held on the 23rd at the Korea Federation of Banks in Jung-gu, Seoul.

At this meeting, relevant agencies jointly reviewed the results of the U.S. Federal Open Market Committee (FOMC) announced early this morning (Korean time) and the resulting impact on domestic and international financial markets.

The U.S. Federal Reserve raised the benchmark interest rate by 0.25 percentage points to 4.75?5.00%. This is the highest rate in 15 years. The rate hike was 0.25 percentage points for the second consecutive month.

Deputy Prime Minister Choo explained, "The Fed removed the phrase about continued rate hikes from its statement and said it will assess the need for further increases based on economic and financial conditions. However, during the press conference, it emphasized that it is prepared to use all necessary measures to maintain the stability of the banking system if needed, while also mentioning that it is not considering rate cuts within this year."

As a result, in the early hours of the international financial market, U.S. Treasury yields fell, but stock prices showed weakness as expectations for a change in the Fed's policy stance weakened.