Lee Bokhyun: "U.S. Credit Rating Downgrade Has More Limited Market Impact Than Before"

Lee Bokhyun, Governor of the Financial Supervisory Service

Lee Bokhyun, Governor of the Financial Supervisory Service, stated that the market impact of the recent downgrade of the U.S. credit rating is limited compared to previous cases. However, he emphasized that vigilance should not be relaxed due to the presence of various domestic and external risk factors.

On May 20, at the Financial Supervisory Service in Yeouido, Seoul, Governor Lee held an executive meeting and said, "The market impact of last week's downgrade of the U.S. credit rating by Moody's is limited compared to previous cases," but added, "We must remain vigilant."

He explained, "This downgrade occurred amid heightened concerns about an economic downturn due to uncertainty in U.S. tariff policy and declining policy credibility. In the long term, it could serve as a trigger that weakens the status of U.S. Treasury bonds and the U.S. dollar as safe assets."

He urged, "We must closely monitor changes in global investor capital flows and their domestic impact, manage foreign exchange risks and foreign currency liquidity in the domestic financial sector in a stable manner, and ensure financial stability based on close cooperation centered on the F4."

Regarding the Fair Trade Commission's investigation into allegations of collusion on loan-to-value (LTV) ratios among the four major domestic banks, and the investigation into suspected collusion in government bond bidding by primary dealers (PDs), Governor Lee argued, "Given the characteristics of the financial industry, measures to promote competition could potentially undermine financial stability and consumer rights. Therefore, it is important to pursue comprehensive consumer welfare while maintaining an appropriate balance between financial stability and competition."

He also requested that every effort be made to establish a sound competitive order within the financial industry by promoting fair finance initiatives from multiple angles, such as encouraging healthy competition in the financial sector, resolving information asymmetry between financial institutions and consumers, and strengthening cooperation between financial authorities and competition authorities.