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BOK Mulls Additional Liquidity Provision Measure for Nonfinancial Firms

Write: 2020-04-02 18:04:08Update: 2020-04-02 18:46:31

BOK Mulls Additional Liquidity Provision Measure for Nonfinancial Firms

Photo : YONHAP News

Bank of Korea(BOK) Governor Lee Ju-yeol says the central bank will consider lending to non-banking financial institutions if the financial market situation worsen due to growing fallout from COVID-19. 

He made the remark in a meeting with BOK senior officials on Thursday, after checking on the current status of the local commercial paper and corporate bond markets.  

Lee said a set of recent BOK measures taken to provide liquidity to the market, involving bond market stabilization funds and repurchase agreements, will help nonfinancial firms secure loans from the financial market for the time being. 

However, he said he could not rule out the possibility of a sudden liquidity crunch given developments in the outbreak, calling the measure under consideration a “safety device.” 

Article 80 of the Bank of Korea Act allows such emergency loan provisions to nonfinancial firms when there is a grave challenge for those companies against securing funds from financial firms. 

The central bank chief ensured the potential measure would not be used to benefit certain individual companies.

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