SEOUL, Nov. 11 (Yonhap) -- South Korea's financial watchdog said Sunday that it has launched a taskforce to better gauge the impact of the prolonged sluggish economic growth and low interest rates on the domestic financial sector.
The taskforce composed of experts from four sectors comprising banks, financial firms, investment firms and insurers will analyze the impact and come up with appropriate countermeasures, the Financial Supervisory Service (FSS) said.
Choi Soo-hyun, first senior deputy governor of the FSS, will head the taskforce. Four other senior officials from the financial watchdog will also participate in the meetings.
The move comes amid growing concerns that the financial sector faces challenges due to longer-than-expected economic slump coupled with low interest rates, which could hurt their loan-deposit margins and the overall profitability.
South Korea's economy grew 6.3 percent in 2010, but the rate plunged to 3.6 percent last year. This year, the growth rate is expected to fall into the 2 percent range.
The yield on three-year Treasuries also fell to as low as 2.77 percent as of end-October from 4.41 percent recorded at the end of 2009.
"Chances are high that low growth rates and low interest rates are here to stay for a long time, which could hurt small and mid-sized financial investment firms and savings banks. They could also worsen the reverse margin situations for some insurance companies," an FSS official said.
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