The South Korean government has announced that if necessary it will take measures to stabilize financial markets, including expanding bond market stabilization funds and the primary collateralized bond obligations(P-CBO) program.

Convening a meeting of macroeconomy and finance-related officials on Thursday, Vice Finance Minister Kim Yong-beom said the government would quickly activate market stability measures if needed. It will do so in accordance with contingency plans to ensure that businesses experience no difficulties in securing cash.

He said there were signs of a temporary slowdown in global credit markets with the dollar strengthening and bond market spreads widening, and that competition to secure dollar liquidity appears to be rising.

He added that the government is aware of weakened business performance from the spread of COVID-19 and that a global cash crunch could be in the making. 

Kim said the government will offer all the support it can so that South Korean companies and financial companies have smooth access to the foreign exchange they need.

He also noted that unlike past crises that emanated from large banks and companies, the COVID-19 crisis is first hitting small and medium-sized businesses. He said unprecedented financial support policies are urgently needed to ensure that those businesses can survive the current difficulties.