Bok-Hyeon Lee “Preparing for an interest rate cut not happening… “Re-evaluation of PF business feasibility”

by times news cr

2024-05-02 15:18:03

Financial Supervisory Service Chairman holds financial situation review meeting
“Conducting a stress test that reflects no-cut and surge in oil prices, etc.”
“The burden of delayed PF restructuring due to prolonged high interest rates… “Quick soft landing”

ⓒNewsis

While the U.S. Federal Reserve (Fed) has frozen the base interest rate for six consecutive times, Financial Supervisory Service Governor Lee Bok-hyun announced that he would strengthen financial system management by conducting stress tests to prepare for a no-cut scenario. In particular, he said he would quickly implement restructuring of the real estate project financing (PF) business, which is considered a weak link in the domestic economy.

On the 2nd, Director Lee held a ‘financial situation review meeting’ at the Financial Supervisory Service headquarters in Yeouido, Seoul, and examined the impact on the economy and financial markets caused by the freeze on the U.S. base interest rate.

Director Lee said, “We will conduct a stress test with a crisis scenario that reflects recent internal and external uncertainties, such as a no-cut scenario or a surge in oil prices,” and added, “We will find weak links in the financial system and strengthen soundness before a crisis becomes a reality.”

He continued, “The recent weakening of the yen has been noticeable due to Japan’s maintenance of an easy monetary policy stance and the interest rate difference between the U.S. and Japan, but the impact on our economy is still limited.” “We will examine the impact this will have on our economy and financial markets and prepare preparedness measures,” he explained.

He added, “As the delinquency rate is likely to rise, especially among vulnerable borrowers, due to the prolonged high interest rates, we will encourage simultaneous improvement in profitability and soundness by quickly resolving delinquent claims through various sales methods.”

Regarding the PF business, which is considered a weak link in the domestic economy, he said, “Considering that concerns are growing about the prolonged high interest rates, delaying PF restructuring may increase the burden, so there is a need to pursue a quick and orderly soft landing.”

In addition, “We are preparing in case the slightest market instability appears due to changes in internal and external economic and financial conditions in the process of promoting a PF soft landing, including the announcement of PF business feasibility re-evaluation standards in early May,” he said. “The market stabilization policy already in place cannot be implemented immediately.” “We will further strengthen our cooperation system with related organizations,” he added.

[서울=뉴시스]

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2024-05-02 15:18:03

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