'Danger level' for S. Korea's financial markets raised: officials

SEOUL, Sept. 29 (Yonhap) -- The danger level for South Korea's financial markets has been raised recently, officials said Thursday, amid deepening fiscal debt problems in Europe and worries over another global recession.
South Korea has a five-tier danger scale to reflect the situation in nation's financial markets and how much the markets are exposed to external risks. The lowest is "normal" and the highest is "serious," according to the officials from the Financial Services Commission (FSC) and its executive body, the Financial Supervisory Service (FSS).
"We determine the danger level by looking at daily or monthly data," an FSS official said. "Its monthly level stands at the third-highest but as things are deteriorating recently, it moves between the third- and second-highest levels on a daily basis."
Each danger level is measured on risks linked to global credit, the nation's sovereign credit, stock and currency market situations and capital market flows, the official explained.
The recently heightened danger level seems to reflect the latest market worries that the global economy might slip back into a recession caused by fiscal woes in Europe and stagnating recovery in advanced nations.
South Korea's financial markets have been pummeled by increased global uncertainties, with its stocks and currency losing significant ground in recent trading sessions.
Against this backdrop, the government has prepared a contingency plan to deal with emergency situations. Officials said that the contingency plan is activated when the danger level is raised to the third level.
Besides the enhanced policy preparedness, the financial authorities also plan to beef up monitoring of foreign currency holdings by banks and financial institutions here as part of efforts to keep tabs on their liquidity status, the officials noted.
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