Chairman Lee Eog-weon of the Financial Services Commission presided over a meeting with relevant authorities, research institutions, and market experts on December 15 to review financial market conditions and risk factors going forward.

A Summary of FSC Chairman’s Remarks

In the first half of this year, there were growing anxieties over financial markets due to the Trump administration’s tariff policy and uncertainties regarding domestic politics. However, in the second half of the year, the Korean economy and market conditions recovered backed by rigorous policy efforts of the new government and improvement in corporate earnings in the semiconductor sector.

Despite this overall sense of stability, there is growing vigilance over domestic financial markets with government bond yields showing an upward movement and the foreign exchange market showing an expanded level of volatility recently.

Nonetheless, the Korean economy is sufficiently equipped with the resilience and the policy capacity to respond to crisis situations backed by strong fundamentals. First, domestic financial institutions have been maintaining an adequate level of soundness. Second, Korea’s foreign exchange reserve is the ninth largest in the world. Third, credit default swap (CDS) premium in Korea has been brought down significantly from the beginning of this year.

In addition, some of the potential risk factors and structural problems for the economy, such as household debt, real estate project finance, and the soundness of nonbank financial institutions, are also being adequately addressed and stably managed through ongoing policy measures.

However, since it is possible to see growing market volatility in the future, the FSC will continue to closely work with related authorities to carefully monitor market conditions and take bold and proactive steps to employ market stabilization measures when it becomes necessary.

Next year, the FSC will strive to push for major transformation in the financial industry rooted in the principles of productive finance, inclusive finance, and reliable finance. To this end, it is crucial to have financial market stability as the backbone of other policy initiatives.

In this regard, it is not only important to consider the factors and issues that are of immediate concerns, such as interest rate and foreign exchange rate, but it is also essential to consider greater changes taking place in global dynamics (such as the uncertainty surrounding monetary policies of major economies, the U.S-China relations, changes in global trade environment, etc.), geopolitical risks concerning the Russia-Ukraine war, and the competition over AI technology. Therefore, it is necessary to go over a variety of risk factors and be prepared for all possible scenarios together with market experts and relevant authorities.

Market Stabilization Programs

At today’s meeting, officials discussed plans for the operation of market stabilization programs (KRW100 trillion-plus) in 2026.

In 2025, the corporate bond market stabilization program purchased KRW11.8 trillion in low-rated corporate bonds and CP (commercial paper), playing an active role in providing backstops in the market.

Considering the need to be prepared for rising market volatility, the market stabilization programs currently in place will continue to be operated in 2026.

In this regard, the FSC and policy financial institutions (KDB, IBK, and KODIT) plan to make available up to KRW37.6 trillion in liquidity to maintain stability in the corporate bond and short-term money market.

In addition, the financial support programs intended to help the restructuring in the real estate project finance market will also continue to operate in the size of up to KRW60.9 trillion.

Further Plan

Since small events can have a larger repercussion in the corporate bond and short-term money markets, FSC Chairman Lee urged officials to make sure to rigorously check various risk factors in advance, such as the maturity structure in the corporate bond market. To make sure to sufficiently prepare for the unexpected, the FSC plans to continue to have market monitoring meetings with related authorities and market experts on an ongoing basis.

* Please refer to the attached PDF for details.