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 ¡ª labeled ¡°resilient¡± earlier this year by the International Monetary Fund ¡ª 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.
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