SVB collapse to have limited impact on global market: finance minister

March 13, 2023

The collapse of the United States-based Silicon Valley Bank (SVB) is expected to have a limited impact on the global financial market, although uncertainties will linger amid monetary-tightening moves, the finance minister said Monday.

Last week, U.S. banking regulators shut down the startup-focused lender SVB Financial Group and took control of its customer deposits in the largest failure of a U.S. bank since the 2008 financial crisis, sparking concerns over its impact on the global financial market.

“Following reports over the shutdown of Silicon Valley Bank in the U.S. over the weekend, volatilities and uncertainties in the financial market at home and abroad have been escalating,” Finance Minister Choo Kyung-ho said ahead of a closed-door meeting on export issues.

Choo, however, added experts still believe that the incident is likely to have limited impacts on the global economy, with U.S. financial authorities also making prompt efforts to protect depositors.

The minister pointed out uncertainties, however, will remain in the global economy due to aggressive monetary tightening moves, adding the government will come up with additional support measures to help exporters.

The industry ministry held an emergency meeting with relevant agencies to assess the impact of the bank’s failure on exporters, and to discuss ways to minimize the possible fallout.

The government plans to beef up monitoring of the related developments on a real-time basis, and to come up with response mechanisms in cooperation with private companies, though the case has not directly affected exports, the ministry said.

On Tuesday, Finance Minister Choo Kyung-ho plans to meet with heads of key financial regulators and the deputy chief of the Bank of Korea to discuss the possible effects of the SVB incident on the domestic market.

The incident took place at a time when South Korea has been struggling to buttress its key economic growth engine of exports amid weak global demand for semiconductors and other major industry items amid a global economic slowdown.

South Korea’s exports fell 16.2 percent on-year in the first 10 days of March due to sluggish shipments of chips. The country’s exports from Jan. 1 to Friday sank 12.6 percent from the previous year, with its trade deficits reaching $22.7 billion so far, according to government data.

Finance Minister Choo Kyung-ho speaks ahead of a closed-door meeting in Seoul on March 13, 2023. (Yonhap)
Finance Minister Choo Kyung-ho speaks ahead of a closed-door meeting in Seoul on March 13, 2023. (Yonhap)