The Ministry of Economy and Finance and the Korea Development Institute (KDI) co-hosted the G20 Global Financial Stability Conference, discussing the influence of strategic changes in the U.S., trade conflicts, and the growing impact of non-bank financial institutions, along with public debt issues.
The conference, held on the 3rd at The Plaza Hotel in Seoul, aimed to address enhancing financial stability and resilience amid structural changes and uncertainty. Over 300 key figures both domestically and internationally attended, deliberating on the challenges international trade and financial systems face, as well as national debt conditions.
Lee Hyung-il, the First Vice Minister of the Ministry of Economy and Finance, highlighted the increasing transitional complexities of the global financial environment in his opening remarks, emphasizing the need for meticulous scrutiny of signals of change, forming fundamental principles for response, and seeking international cooperation.
KDI President Cho Dong-chul indicated that complex financial and economic challenges are facing the world, asserting that an international cooperative effort is necessary as no country can independently tackle these issues.
Keynote speaker Maurice Obstfeld from the Peterson Institute for International Economics remarked on the weakening role of the dollar amid de-Americanization of trade and finance, stressing the necessity for strengthened global cooperation to adapt to the structural transformations in the world economic order historically supported by the U.S.
Professor Markus Brunnermeier from Princeton University discussed the shift from a system based on multilateral norms to a bloc-oriented system of major powers, addressing changes in the status of U.S. treasury securities as global safe assets and the diversification of global safe asset supplies in times of political uncertainty.
During the first session, participants exchanged views on global economic uncertainty and trade policy uncertainty concerning foreign direct investment. They noted that trade policy uncertainty could increase the volatility of foreign direct investment, posing a risk to the global economy, recommending responses through structural reforms and fiscal policies.
The second session examined the expanded role of non-bank financial institutions (NBFI) and the potential opportunities and risks associated with artificial intelligence (AI) and stablecoins, advocating for clear regulations, guidelines, and international collaboration to ensure financial stability.
The final session analyzed how accumulated global debt could trigger structural changes in the global financial system and pose risks to financial stability. It also noted the need for advancements in international discussions, such as the G20 Common Framework for dealing with debt in developing countries.
A Ministry of Economy and Finance official stated they plan to thoroughly review the policy suggestions discussed at the conference and incorporate them into international discussions at upcoming G20 meetings, including the Finance Ministers and Central Bank Governors meeting scheduled for October, with South Korea as a co-chair.