Financial Services Commission (FSC) Chairman Yim Jong-yong on Monday predicted market volatilities from British departure from the European Union (EU) could go on for lengthy period. But he did not predict the consequences will build up to a major global-wide financial crisis as in 2008.

Yim’s comments were made at an emergency cabinet meeting in Seoul to discuss measures to counter Britain’s exit from the EU - also called Brexit.

The local market would receive immediate blow from the unexpected vote outcome, he said. The fall in the local stock market, foreign investors’ net sales volume, and increase in Korea’s credit default swap (CDS) premium - a kind of insurance premium against the danger of a bond losing face value - have not been as severe as in the past crises, he added.

According to FSC, foreign investors net sold 63.1 billion won ($53.1 million) worth of funds last Friday in Seoul after Britain voted to leave the EU, which is considered a normal level. The gain in CDS premium was also limited to 6.5 basis points (1 basis point equals to 0.01 percentage point).

Yim said that although the “Leave” outcome upset markets around the world, Brexit itself was a forewarned event, and that the United Kingdom, the EU, and the United States had prepared contingency plans for different scenarios. Yim also added that it will take a considerable period of time for Britain to actually leave the EU, which makes the situation different from 2008 when crisis broke out immediately after the collapse of Lehman Brothers.

The FSC chairman, however, noted that there is still great uncertainty as the British choice could undermine the unity in the single economic bloc and encourage other membres to leave. Yim said that volatility in the financial market could last long as EU cope with new challenges.

By Kim Hyo-sung

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