Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Japan's loan denial unlikely to have effect'
Financial Services Commission (FSC) Chairman Choi Jong-ku speaks during a press conference at a restaurant in central Seoul, Friday. / Courtesy of FSC
By Kim Bo-eun
By Kim Bo-eun
The chief of the Financial Services Commission (FSC) said possible economic retaliation measures by Japan will likely leave Korean companies and financial markets unaffected.
His remarks came as concerns are growing that Japanese banks could refuse to roll over maturing debts and extend new loans for Korean entities, in addition to curbs on exports of semiconductor supplies that went into effect, Thursday.
“Even if Japan were to do so, we will not have much difficulty in dealing with the situation,” FSC Chairman Choi Jong-ku said at a press conference in Seoul, Friday.
He referred to the situation in 2008, when local financial institutions had difficulty getting new loans, as well as extending existing ones.
“(Compared to that time), the macroeconomy is stabilized now and so is the financial market. Our financial institutions will easily be able to get loans elsewhere even if Japan does not lend to them,” Cho said.
Meanwhile, he stated financial authorities are preparing for Japan's economic retaliation measures possibly expanding to the finance sector.
“We are unable to know for certain what kind of additional measures Japan will take, but each ministry is reviewing possible circumstances and preparing for these,” Choi said.
According to data by the Financial Supervisory Service, outstanding loans to Korean entities from four Japanese banks ― Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corporation, Mizuho and Yamaguchi Bank ― amount to 18 trillion won in March. This is 23.5 percent of the total amount of loans provided by foreign banks here.
The scale of loans from Japanese banks has been decreasing since September 2018, when the total amount stood at 21.08 trillion won.
Other measures besides denying loans or refusing to roll over maturing debts could include limiting Japan's investment in Korea's capital market, or limiting the transfer of funds.
Japan is estimated to own over 12 trillion won in local stocks but this is only 2.3 percent of foreign-owned local stocks.
Choi said, “Even if Japan were to withdraw its investments from the stock and bond market, there would be little effect.”
On July 1, Tokyo stated it would place sanctions on exports of supplies for smartphone and semiconductors.
This is viewed as a retaliatory measure against court rulings last year that ordered Japanese companies to compensate Korean victims of forced labor under the 1910-1945 colonial rule.
Tokyo's position is that the issue was settled in a bilateral treaty in 1965.
The exports control has fueled calls for a boycott against Japanese products here. Related petitions have been posted on Cheong Wa Dae's website, and continue to earn public support.