Bank of Korea(BOK) Governor Lee Ju-yeol on Thursday emphasized that local banks need to shore up their fiscal soundness in preparation for growing anxiety in the international financial market.

He made the remark during a meeting with the heads of local banks, saying a protracting trend of low-interest rates and corporate restructuring could eat away at profitability of local banks.

Lee also said the uncertainty about the U.S. interest rates, slowdown of the Chinese economy and Britain’s decision to leave the European Union are heightening uncertainty in international financial markets and triggering severe fluctuations of interest rates and currency exchange rates.  

During the meeting, Lee also introduced what was discussed during an international conference hosted in Seoul on Tuesday by the central bank, together with the Korea Institute for International Economic Policy(KIEP), and the Peterson Institute for International Economics(PIIE).

He said that most participants in the conference agreed that for small open economies like South Korea, nothing is more important than enhancing fiscal soundness through debt management and augment of foreign reserve holding as well as strengthening economic fundamentals through continuation of corporate restructuring.