Stability of Korea’s financial system has been undermined somewhat in some financial markets, amid hightened uncertainties about domestic and global macro-financial conditions in the second half of 2022. Financial intermediation functions of the bond and money markets have weakened due to an accidental credit event on top of expanded financial market volatility and growing concerns for credit risks stemming from the monetary policy tightening by major countries and ongoing global geopolitical risks. Accordingly, the Financial Stress Index (FSI), which reflects the level of short-term instability in the financial system, rose to the crisis stage (threshold 22) in October this year, but then has decreased slightly following the implementation of market stabilization measures by the government and the Bank of Korea in November.