The Financial Supervisory Service (FSS) will strengthen monitoring of foreign exchange and capital markets and closely examine the financial conditions of Korean companies operating in the Middle East in response to the regional crisis.
FSS Governor Lee Chan-jin convened an executive meeting at the regulator's headquarters in Yeouido, Seoul, on the 3rd. "If the Middle East situation becomes prolonged, there are concerns about rising international oil prices and increased financial market volatility," Lee said. "Focus supervisory resources on financial market stability."
The FSS will establish a "Middle East Situation Emergency Response Task Force" headed by Senior Deputy Governor Lee Se-hoon. The task force will coordinate with the Ministry of Economy and Finance, Financial Services Commission, Bank of Korea, and local financial institutions to monitor market conditions and implement necessary measures.
"Execute phased stabilization measures without disruption according to the existing internal emergency response plan," Governor Lee said. "If the situation deteriorates, we must elevate the emergency response level and immediately implement necessary stabilization measures."
The FSS will strengthen management of foreign currency asset and liability positions at each financial institution to prepare for increased foreign exchange market volatility. The regulator will also review the effectiveness of credit lines and emergency funding plans. To respond to fluctuations in domestic stock and bond markets, the FSS will closely monitor daily investor trends.
Governor Lee instructed officials to "examine the financial conditions of companies operating in or trading with the Middle East." The FSS plans to use its SME Financial Assistance Consultation Center to receive reports of difficulties from small and medium-sized enterprises and ordinary citizens burdened by rising oil prices.
Additionally, Governor Lee urged that "the public may experience inconveniences from cyber hacking attempts exploiting unstable international circumstances and resulting system failures," adding that "financial institutions must ensure thorough internal inspections of their systems."