SEOUL– South Korea’s financial regulator vowed Thursday to work hard to maintain stability in local financial markets by “preemptively” and “cooperatively” responding to any destabilizing factors.
Lee Bok-hyun, head of the Financial Supervisory Service (FSS), said his agency will execute “stress test” on financial firms as part of risks management amid mounting financial market volatility.
“We will strive to maintain financial market stability by preemptively and cooperatively responding to destabilizing factors arising from home and abroad,” Lee told a press meeting.
“We will step up monitoring so as to prevent risks related to short-term liquidity and real estate from turning into a systemic risk,” he added. “In this process, we will explore ways for more effective responses in cooperation with relevant agencies that will include stress test based on shared scenarios with the Bank of Korea.”
His remarks came as South Korea’s financial markets have been going through increased volatility due to aggressive monetary tightening in major economies and growing worries over global economic slowdown.
The local currency, in particular, has been hard hit recently, with the won falling through the 1,390 won mark against the U.S. dollar for the first time in over 13 years Wednesday.
Faced with fast rising economic uncertainty, Lee emphasized the importance of local financial firms beefing up their crisis-responding capacity in a way that they are able to keep playing their role of providing funds to those in need.
“To this end, we will analyze financial firms’ crisis-responding levels and induce them to secure sufficient amount of capital and loss reserves,” he said, adding monitoring on risk management will be intensified for financial companies with weak liquidity positions.
Source: Yonhap News Agency