South Korea's top financial regulator said Tuesday the government will expand financial support for companies hit by Japan's export restrictions if needed, as Tokyo's decision to drop Seoul from its list of trusted trading partners is set to take effect this week.
Choi Jong-ku, chairman of the Financial Services Commission (FSC), made the remarks at a meeting with senior executives of banks, a day before South Korea is officially dropped from Japan's so-called whitelist.Japan, which tightened exports of key materials to South Korea on July 4 in apparent retaliation over compensation for wartime forced labor, decided to drop Seoul from the list earlier this month.
"The financial industry needs to play a role to limit the impact of Japan's unfair export curbs on our companies," Choi told the meeting.
"With regard to a move by Japan to remove Korea from its 'whitelist,' the FSC is in close consultations with banks and other relevant organizations for financial support," Choi said.
The FSC formed a task force to support companies affected by Japan's export restrictions.
So far, the FSC has provided 265.4 billion won (US$217.8 million) in financial support for companies, Choi said.
FSC officials have played down market speculation that Japan's export curbs may escalate into retaliatory measures in the Korean financial sector.
However, Choi said the government is closely monitoring market situations and remains vigilant with contingency plans in place against any possible scenario.
At the end of June, Japan accounted for 2.3 percent, or 13 trillion won, of foreign capital in Korea's equity market, according to the FSC.
Korean banks' borrowings from Japan amounted to $9.26 billion, accounting for 6.6 percent of total overseas borrowings in June, the FSC said. (Yonhap)