South Korean securities firms’ adjusted net capital ratio could fall to 162% from 195.4% if a stock-market crash and funding-market freeze occur simultaneously, the Bank of Korea said in its Financial Stability Report released on the 22nd. The 33.4-percentage-point decline was the largest deterioration among three scenarios modeled on the 2020 market crash, 2022 interest-rate and refinancing pressures, and their combined occurrence. The liquidity coverage ratio was projected at 106.4%, with readings closer to 100% indicating greater cash-shortage risk, although every individual firm remained above a 100% capital ratio. The vulnerability reflects rapid balance-sheet growth, increased reliance on short-term funding and asset-liability maturity mismatches. Total assets reached 1,053.3 trillion won at the end of the second quarter, while securities holdings stood at 559.2 trillion won, 56.2% of which were bonds. Firms also net issued 23 trillion won of commercial paper and 17.3 trillion won of short-term bonds in the first half of the year, while customer repurchase-agreement balances rose to 131.1 trillion won. The central bank also flagged elevated project-finance and non-investment-grade credit risks, particularly among small and mid-sized firms. It said current capital and liquidity conditions remain sound but urged vigilance as funding, credit and market risks could intensify if market conditions change.