Sitting in a lake teeming with wildlife, several hours by train from Seoul, South Korea’s Legoland is an unlikely poster child for the global struggle to fight inflation while maintaining financial stability.
But a default on 205 billion won ($155 million) worth of debt by the theme park’s developer triggered the worst meltdown in South Korea’s 1.69 quadrillion won credit market since the global financial crisis. And as interest-rate hikes batter real estate markets around the world, it’s a reminder that even relatively safer financial systems like South Korea’s — labeled "resilient” earlier this year by the International Monetary Fund — face threats of contagion.
South Korea’s central bank embarked in August last year on one of the earliest rate-hike cycles in the world, and is still battling inflation that at one point reached the highest level in more than two decades.