Aftermath of Reciprocal Tariffs... Lee Bok-hyun, "Timely Implementation of Market Stabilization Measures if Necessary"

FSS Holds Review Meeting on Response to Reciprocal Tariffs

Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), emphasized the need to be prepared to promptly implement market stabilization measures if necessary in relation to the U.S. reciprocal tariffs.

On the morning of the same day, Governor Lee held a 'U.S. Reciprocal Tariff Response Review Meeting' at the FSS and stated, "Through the activation of an emergency response system, please make every effort to respond to industry-specific damage analysis, financial market stabilization, and financial sector soundness management."

The FSS plans to hold weekly meetings chaired by the governor regarding reciprocal tariffs in the aftermath of the U.S. announcement. A total of five teams (General Team, Market Inspection Team, Industry Analysis Team 1, Industry Analysis Team 2, and Regional Response Team) have been formed to carry out related practical work.

Governor Lee diagnosed that immediately after the announcement of reciprocal tariffs, concerns about a global economic recession have expanded, China has taken immediate retaliatory measures, raising the possibility of escalating trade conflicts, and the volatility and uncertainty of global and domestic financial markets have greatly increased.

He said, "Since the impact and transmission routes on our industries are very complex due to simultaneous and differential tariffs imposed on multiple countries, please precisely analyze the damage level by identifying the production relocation routes of export products as much as possible, and examine the impact on not only export companies but also small and medium-sized partner companies, and work with relevant agencies to devise necessary response measures."

He added, "It is essential to closely monitor the negative market ripple effects and thoroughly inspect trends in corporate fund handling and corporate loan soundness in the financial sector after the imposition of reciprocal tariffs."

Governor Lee also urged, "Due to the sharp drop in stock prices, there is growing concern about expanding investment losses centered on individual investors in products such as equity-linked securities (ELS) and leveraged products, so please proactively respond to consumer protection by checking the status of high-risk product sales."

Along with this, Governor Lee requested that, as the number of companies facing difficulties increases, reasonable regulatory improvement measures be sought through communication with the financial sector. The FSS is reviewing ways to provide incentives related to capital regulations so that banks can smoothly support corporate funding.

It was also mentioned that insurance companies are considering granting sufficient preparation periods to appropriately respond to changes resulting from institutional improvements such as rationalization of capital regulations and revision of insurance liability evaluation standards.

Meanwhile, Governor Lee referred to recent system failures at the Korea Exchange and Kiwoom Securities, stating, "Concerns and distrust regarding the stability of capital market transactions may intensify," and added, "Please ensure that investor compensation can be promptly made in the event of an incident."