On the 2nd, Lee Bok-hyun, Governor of the Financial Supervisory Service, urged that "delaying the restructuring of real estate project financing (PF) in a high-interest rate environment could increase burdens, so it is necessary to promote a swift and orderly soft landing," in relation to the United States maintaining its benchmark interest rate for the sixth consecutive time.
Governor Lee held a financial situation review meeting immediately after the U.S. Federal Reserve (Fed) decided to keep the benchmark interest rate unchanged. At the meeting, he ordered a stress test reflecting the possibility of a 'no cut' in U.S. interest rates within the year and recent domestic and international uncertainties such as the surge in oil prices. He also emphasized the need to identify weak links within the financial system and strengthen soundness before a crisis materializes.
Governor Lee also viewed that the recent yen weakness, driven by Japan's continued accommodative monetary policy and the interest rate differential between the U.S. and Japan, has had a limited impact on the Korean economy so far. However, he stressed the importance of examining the effects of the intensified simultaneous depreciation of the yen and major Asian currencies due to global financial market uncertainties on Korea's economy and financial markets, and preparing countermeasures.
Given the prolonged high-interest rate environment, there is a high possibility of rising delinquency rates, especially among vulnerable borrowers, so non-performing loans should be promptly resolved through various sales methods. Governor Lee stated, "In the process of promoting a soft landing for PF, including the announcement of PF feasibility reassessment criteria in early May, we will strengthen cooperation with related agencies to immediately implement the market stabilization policies already prepared in case any market instability arises."
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