South Korea is increasingly relying on extended crisis-era financial tools to manage foreign exchange (FX) and bond market pressures, underscoring a growing mismatch between the scale and mobility of today’s capital flows and a regulatory framework that was not designed for persistent system-wide stress.

RECENT SIGNALS

That mismatch was on display in mid-December, when the government convened back-to-back interagency meetings on the FX market and broader financial stability.

While the meetings produced a handful of new emergency steps, their more significant outcome was the extension and refinement of existing temporary measures, including bond market stabilization facilities and the FX swap