The Ministry of Economy and Finance, Conference Call… “US Credit Downgrade, Limited Market Impact” (Summary)

Conference Call with Bank of Korea and Others
“Closely Monitoring Domestic and International Financial and Foreign Exchange Markets”
“Plans to Respond According to Contingency Plan if Necessary”, ‘[Sejong = Edaily Reporter Kang Sin-woo] The Ministry of Economy and Finance announced on the 19th that it held a conference call to assess the market impact following Moody’s downgrade of the US credit rating from Aaa to Aa1, presided over by Yoon In-dae, assistant vice minister of the Ministry of Economy and Finance.’,
,
, (Photo = Yonhap News), ‘The meeting was attended by Assistant Vice Minister Yoon, the Bank of Korea, the Financial Services Commission, the Financial Supervisory Service, and the International Finance Centre.’,
,
, ‘Participants evaluated that the downgrade by Moody’s is a move to align with other rating agencies (S&P in 2011 and Fitch in 2023) and was somewhat anticipated considering Moody’s previous negative outlook on the US credit rating. Therefore, the market impact is generally expected to be limited.’,
,
, ‘However, given the potential for the downgrade to serve as a factor increasing volatility in the financial and foreign exchange markets in the short term amid existing external uncertainties like tariff negotiations between major countries and the US economic situation, it was decided to closely monitor trends in domestic and international financial and foreign exchange markets with a tightly coordinated response system among relevant agencies.’,
,
, ‘A ministry official stated, “If necessary, we will respond according to contingency plans with a closely coordinated system among relevant agencies.”’,
,
, ‘The Ministry of Economy and Finance also conducted a joint conference call with relevant agencies in August of last year when the “fear of recession” originating from the US grew. During the meeting, it was shared that the US stock market experienced a significant decline due to concerns about economic slowdown, poor performance of major companies, and profit-taking from rising stock prices. It was also stated that the 24-hour monitoring system for domestic and international financial markets will continue, and responses will be made in tight coordination with relevant agencies based on situation-specific contingency plans.’,
,
, ‘Meanwhile, on the 16th (local time), Moody’s announced that the US national credit rating will be downgraded by one notch from the highest rating of “Aaa” to “Aa1”. This is the first time in 21 months that the Big Three rating agencies have downgraded the US credit rating. The decision was made due to the significantly increased ratio of US government debt and interest payments over the past decade.’,
,
, ‘Previously, Standard & Poor’s (S&P) downgraded the US rating from AAA to AA+ in 2011. Subsequently, Fitch revised it from AAA to AA+ in August 2023.’,
,
, ‘US Treasury Secretary Scott Bessent commented on Moody’s decision to downgrade the US government’s credit rating by saying, “I think everyone, including myself, sees Moody’s credit rating as a ‘lagging indicator’.” He added, “Who cares about this downgrade? Qatar won’t care. Neither will Saudi Arabia or the UAE. They are all investing heavily in the US.”’,
,
,