Lee Bok-hyeon, the head of the Financial Supervisory Service, assessed that the market impact from the downgrade of the U.S. credit rating is limited. However, he urged the financial sector to closely examine foreign currency liquidity and exchange rate risks in preparation for changes in global capital flow and the possibility of exchange rate instability.
On the 20th, Lee noted during an executive meeting, “The market impact from Moody's downgrade of the U.S. credit rating is limited compared to past cases,” but added that “Given the numerous internal and external risk factors, vigilance must not be relaxed.”
Lee stated, “The downgrade of the credit rating occurred due to rising concerns about a recession stemming from uncertainties in U.S. tariff policy and a decrease in policy credibility,” and said that “In the long term, it could act as a trigger that undermines the safety asset status of U.S. government bonds and the dollar.” He further indicated, “We must closely monitor changes in global investors' capital flows and domestic impacts,” and emphasized the need to manage foreign exchange risks and liquidity in the domestic financial sector stably while ensuring financial stability based on close cooperation centered around the F4.
In that meeting, Lee emphasized the establishment of a sound competitive order within the financial industry. He remarked, “Concerns have been raised about the oligopolistic structure of some financial infrastructures and the potential for competitive restrictions due to information exchange practices among certain financial companies,” and added that “Due to the nature of the financial industry, necessary measures for financial stability can trigger competitive restriction controversies, while conversely, measures to promote competition may pose risks to financial stability and consumer rights, so we need to maintain an appropriate balance and promote consumer welfare.”
He also stated, “We must pursue fair finance initiatives in various ways, including promoting healthy competition in the financial sector, resolving information asymmetry between financial companies and consumers, and strengthening cooperation systems between financial authorities and competition authorities,” urging that “We must do our utmost to establish a sound competitive order within the financial industry.”