Emergency Convening on the Day of the Strike: 5 Reasons the Bank of Korea Formed a 'Middle East Crisis TF'
On March 1st — the very day of the US-Israel strike on Iran — Bank of Korea Governor Chang-yong Rhee personally chaired an emergency situation review meeting and launched a 'Middle East Crisis Assessment Task Force (TF)'. A 24-hour monitoring system was activated to prepare for the triple shock of oil prices, exchange rates, and the bond market.
On the night of February 28th, when the US and Israel launched airstrikes on Iran, the Bank of Korea did not sleep. Governor Chang-yong Rhee personally chaired an Emergency Situation Review Meeting the following day, March 1st, and swiftly launched the 'Middle East Crisis Assessment Task Force (TF)'. With three fuses ignited simultaneously — soaring oil prices, explosive exchange rate volatility, and bond market chaos — what card did the central bank play?
1. What Did Chang-yong Rhee Do on the Night of the Strike?
Just hours after the US-Israel joint strike on Iran began on the night of February 28th, the Bank of Korea convened an Emergency Situation Review Meeting chaired by the Governor. The meeting focused on response plans by oil supply disruption scenario and the impact on domestic financial markets.
"We will closely monitor the financial market situation and respond immediately if necessary."
— Official statement of the Bank of Korea (March 1, 2026)
As a result, the Bank of Korea officially announced on March 1st the formation of the 'Middle East Crisis Assessment TF' and the launch of a 24-hour monitoring system.
2. The 3 Key Risk Indicators the TF Is Watching
If all three indicators deteriorate simultaneously, the Bank of Korea's last resort measures are foreign exchange market smoothing intervention and emergency liquidity supply.
3. Why a Hormuz Blockade Would Be a Direct Hit on the Korean Economy
Korea relies on the Middle East for approximately 70% of its oil imports. If Iran's IRGC were to blockade the Strait of Hormuz:
- Full disruption of crude oil transport from Saudi Arabia, UAE, and Kuwait
- LNG (liquefied natural gas) supply also affected due to damage to Qatar volumes, driving prices up in tandem
- Trade balance turning to a deficit → undermining Korea's current account surplus structure
- Rising energy import costs → producer prices → consumer prices sequential pass-through
During the 2022 Russia-Ukraine war, domestic consumer prices were pushed up by over 0.8 percentage points from energy price increases alone. A full-scale Middle East war could deliver an even greater shock.
4. Governor Rhee's Options — The Interest Rate vs. Exchange Rate Dilemma
The Bank of Korea is currently maintaining a policy of 6 consecutive rate freezes (2.75%). However, the Middle East crisis poses a complex equation for the Governor.
| Scenario | Bank of Korea Response Direction |
|---|---|
| Oil shock → Re-ignition of inflation | Hold off on rate cuts or reconsider rate hike |
| Sharp KRW/USD depreciation → Capital outflow | FX market intervention + swap line activation |
| Simultaneous growth slowdown + price surge (stagflation) | Cannot respond in both directions → Worst-case dilemma |
In a stagflation phase, a central bank can only choose one: raise rates to control inflation, or cut rates to stimulate growth.
5. Why the '24-Hour TF' Matters — Comparison with 2008 and 2020
It is rare for the Bank of Korea to establish a separate task force.
- 2008 Global Financial Crisis: Dollar swap line activated, emergency rate cut of 75bp
- 2020 COVID-19 Pandemic: Emergency Monetary Policy Committee convened, big cut (50bp) implemented
- 2026 Middle East Crisis: Preemptive TF formation + 24-hour monitoring — paradigm shift toward proactive prevention
This TF is different from the past in that it represents a 'preemptive defense' system rather than a reactive response. In an era where global supply chains face the dual pressure of US-China tensions and Middle East instability, central banks too must now maintain a 24-hour War Room structure.
Image: Bank of Korea Headquarters | Wikimedia Commons
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