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May 11, 2022
- Household Loans, April 2022
- The outstanding balance of household loansin all financial sectors rose KRW1.3 trillion in April 2022 as the decreasing trend seen since the beginning of this year came to a halt but staying at a stable level overall.The financial authorities will continue to closely monitor trends in household loans in order to help maintain its growth pace at a stable level and to prevent it from posing risk to the economy. (Overall) The household loan balance in April 2022 (up KRW1.3 trillion) edged up for the first time this year in contrast to a considerable drop observed in the previous month (down KRW3.6 trillion). However, the growth rate (up 3.1%, y-o-y) shows a continuing slowdown from the second half of the previous year. (By Type) Mortgage-backed loans went up slightly while other types of loans fell at a considerably slower rate, pushing up the total balance of household loans. Mortgage-backed loans in April rose KRW2.8 trillion, growing at a slightly slower rate compared to the previous month (up KRW3.0 trillion).Other types of loans edged down KRW1.6 trillion, declining at a significantly slower rate compared to the previous month (down KRW6.5 trillion), but keeping the trend of a slowdown from the end of last year. (By Sector) The balance of household loans edged up from the previous month in most sectors but the mutual finance sector (down KRW1.0 trillion) stayed on a downward trend due to a drop in non-mortgage types of loans. - (Banking Sector) The banking sector saw an overall increase of KRW1.2 trillion. Mortgage loans from banks rose KRW2.1 trillion, growing at a similar rate compared to the previous month (up KRW2.1 trillion).Other types of loans fell at a slower rate compared to a month ago (down KRW3.1 trillion), edging down KRW0.9 trillion as credit loans went down KRW0.5 trillion. -(Non-Banking Sector) In the non-banking sector, the household loan balance increased KRW0.1 trillion. Insurance companies (up KRW0.2 trillion), savings banks (up KRW0.3 trillion
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May 02, 2022
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Apr 27, 2022
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Apr 15, 2022
- FSC Introduces Improvements to Cloud Computing and Network Separation Rules in Financial Sector
- The FSC unveiled its plans to improve regulations on cloud computing and network separation in financial sectors on April 14. The financial industry has been raising concerns about difficulties in adopting and using new digital technologies as a result of excessive regulations on cloud computing and network separation. Therefore, in order to support the financial sectors efforts for digital transformation in a stable manner, the authorities have introduced a set of measures to improve regulations on cloud computing and network separation. On cloud computing, the changes will focus on (a) clarifying the scope (and types) of work that can make use of cloud computing, (b) overhauling the usage process to remove redundancies and similarities and (c) making a transition from the current prior reporting requirement to ex post facto reporting. On network separation, the uniform application of the network separation rules will be eased in stages starting with the development and test servers. Background The acceleration of digital transformation in financial services has been pushing up demand for new digital technologies such as cloud computing, big data analytics and artificial intelligence (AI). However, there have been continuous complaints from the industry that the current regulations on data security in the financial sector regarding cloud computing and network separation have been too strict, thereby hindering the adoption and use of new digital technologies. In order to address this issue, after taking into account various opinions from the financial industry,the FSC has prepared the measures for improving regulations on the use of cloud computing and network separation to promote digital innovation in the financial industry. Overview of Current Regulation on Cloud Computing and Network Separation I. Regulation on Cloud Computing (Usage Status) The financial sector has thus far been using cloud computingfor back office (non-essential types of work) purposes includi
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Apr 13, 2022
- FSC Announces Screening and Licensing Plan for MyData Service Providers in 2022
- The FSC announced this years screening and licensing plan for financial MyData service providers on April 13. The authorities will continue to provide support for innovative firms to enter the market in order to further promote the growth of MyData services as a key driver of growth in the financial industry. For consumer protection purposes, however, the authorities will strengthen pre-licensing control measures as well as post-licensing management. In order to provide more in-depth screening and consultation, the authorities will accept applications en bloc periodically at the end of every quarter and have them screened by external experts. Background MyData business came under the purview of the law with the revision to the Credit Information Use and Protection Act in February 2020 which aimed to strengthen personal data privacy and securityand ensure the stable provision of services.From an early stage, the authorities minimized the entry barrierto promote access of innovative firms while adopting a licensing system to help establish a sound MyData business ecosystem. Since the first batch of MyData service providers that were granted full license for operation on January 27, 2021, a total of 56 MyData service providers have been given full licenses with 45 MyData services being launched so far. However, there still exists demand for additional licensing by small-scale fintechs and financial companies. Therefore, after operating a taskforce composed of relevant experts,the authorities held discussions on MyData licensing plan for future as well as issues to consider for further screening and licensing. Screening and Licensing Plan for MyData Service Providers in 2022 The licensing requirements for new entrants will be maintained at the current level to promote a continuing provision of innovative services by new entrants that are equipped with creative ideas. Nonetheless, improvements will be made in the following areas for the purpose of consumer protection giv
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Apr 13, 2022
- Household Loans, March 2022
- The outstanding balance of household loansacross all financial sectors fell KRW3.6 trillion at the end of March 2022, continuing to show a steady decline as the pace of slowdown has picked up compared to the previous month (down KRW0.3 trillion).The balance of household loans in March grew 4.7 percent from a year ago, steadily declining from the second half of the previous year. By type, mortgage-backed loans in March increased KRW3.0 trillion,growing at a slightly faster rate compared to the previous month (up KRW2.6 trillion) but continuing to maintain the pace of a slowdown since the second half of the previous year. Other types of loans including unsecured loans fell KRW6.6 trillionled by the banking and mutual finance sectors, showing an accelerated pace of slowdown from the end of the previous year. By sector, the balance of household loans dropped KRW1.0 trillion in the banking sector as mortgage-backed loans went up KRW2.1 trillionbut other types of loans including credit-based loans fell KRW3.1 trillion.The nonbank sector saw a drop of KRW2.6 trillion, showing an accelerated rate of slowdown compared to the previous month (down KRW0.1 trillion) led by the mutual finance sectors. The trends in household loans continue to be on a stable path as the balance of household loans declined KRW3.6 trillion in March 2022 and fell considerably from the previous month. Although mortgage-backed loans increased KRW3.0 trillion, other types of loans including unsecured loans dropped significantly (down KRW6.5 trillion) due to increases in borrowing rates, an expanded application of the debt service ratio (DSR) rule on individual borrowers and a slowdown in housing transactions,leading to an expansion in the pace of slowdown in aggregate terms. The financial authorities will continue to closely monitor trends in household loans in order to help maintain its growth pace at a stable level. * Please refer to the attached PDF for details.
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Apr 01, 2022
- FSC Approves Rules Change to Gradually Introduce Mark-to-Market Valuation on Corporate MMFs
- The FSC approved a revision to the regulation on financial investment business at the 6th regular meeting held on March 30 for gradually introducing the mark-to-market valuation method on corporate money market funds (MMFs) and to check relevant preparation and implementation to facilitate a soft-landing of the mark-to-market method in the market. Background The mark-to-market valuation method on corporate MMFs is scheduled to take effect from April 1, 2022, which was introduced through amendments to the Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSCMA) and the regulation on financial investment business in March 2020. Although the mark-to-market valuation method is considered as the rule of the game in principle, prior to the amendments, the book value method was permitted on MMFs as long as the disparate rate in the market-to-book value is within 0.5 percent. However, when disparity in the market-to-book value widens, there is a possibility of causing an abrupt and large-scale redemption as the earlier the investor redeems his/her money, the higher valuation s/he will get on return. As such, the amendments have been introduced to bring about improvements by introducing and implementing the mark-to-market valuation method on corporate MMFs from April 2022. Some of the key changes include (a) making an exemption to allow the book value method on corporate MMFs with more than 30 percent of stable assets as prescribed by the regulation on financial investment business and (b) expanding the duration of corporate MMFs using the mark-to-market valuation method from 75 days previously to 120 days to promote a wider use. However, with a growing potential of rising volatility in short-term money markets recently, there have been calls for a need to introduce the mark-to-market valuation method in a step-by-step manner in order to prevent corporate MMFs from turning into potential risk factors. With the MMFs current preference for the bo
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Mar 31, 2022
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Mar 24, 2022
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Mar 24, 2022
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Mar 23, 2022
- Maturity Extension and Payment Deferment on Business Loans Extended for Six More Months
- FSC Chairman Koh Seungbeom held a meeting with the financial industry groups and state-backed financial institutions on March 23 and made a final decision to extend the availability of loan maturity extension and payment deferment for SMEs and small merchants for six more months until the end of September 2022. Current Situation Since April 2020, the financial industry has made available maturity extensions and payment deferments to SMEs and small merchants struggling through the coronavirus pandemic. Between April 2020 and January 2022, the total volume of loans (principal and interest) under these programs amounted to KRW291.0 trillion (or 1,165,000 cases).As of the end of January 2022, the balance of loans under these programs amounted to KRW133.4 trillion (or 704,000 cases). The maturity extension and payment deferment programs have contributed to the recovery efforts of SMEs and small merchants without businesses having to worry about their payment burdens. According to a survey conducted by the Korea Federation of SMEs in January 2022, some 80 percent of SMEs have indicated that these support measures have helped them. The measures to help ease the payment burdens of businesses after the program expiresand the measures to reinforce the debt structureare also currently being implemented seamlessly. About 54 percent (or KRW9.0 trillion) of loans under the payment deferment program (principal and interest) have completed one-on-one pre-consultation with financial institutions, and about one third of them (KRW3.0 trillion) have already begun making payments on loans. Background Despite extending the availability of maturity extension and payment deferment programs three times over the past two years,SMEs and small merchants are continuing to experience difficulties due to the spread of the coronavirus variants. In its decision to pass the supplementary budget on February 21, 2022, the National Assembly made an additional bipartisan comment to seek an additional ex
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Mar 21, 2022
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Mar 18, 2022
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Mar 14, 2022
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Mar 10, 2022
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Mar 07, 2022
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Mar 04, 2022
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Mar 03, 2022
- FSC Holds Meeting on Promoting Further Growth of Financial MyData Services
- FSC Chairman Koh Seungbeom held a meeting with financial MyData service providers, market experts and other relevant institutions on March 3 to discuss ways to promote further growth of the financial MyData industry. During the meeting, participants discussed diverse issues ranging from creating a fairer market place for service providers to ensuring consumers right to choose to strengthening measures for financial data security to making changes to the current regulatory framework. The following is a summary of Chairman Kohs keynote address. Chairmans remarks Since the first launch of the API-based MyData services in the financial sector about two months ago,public use of financial MyData services has become widespread with more than 12.5 billion cases of data transfer performed by 39 service providers (as of Feb. 21, 2022) and some 18.4 million individuals signing up for financial MyData services in aggregate terms. (Significance) In a society characterized as hyperconnectivity, hyperconvergence and hyperindividualism where barriers are crumbling down between diverse sectors and industries and different technologies and industries are being linked together, data is often considered as an essential facility. In a data-driven economy, financial MyData service was introduced for the first time in the world with an aim of guaranteeing data privacy rights of financial consumers and of enabling an integrated search of personal financial data scattered across all financial sectors. The API-based financial MyData services brought about many benefits. First, MyData services allow data subjects to use their own data according to their individual needs and make the use of private banking services easily accessible to ordinary consumers. Second, MyData services enable users to find and manage their financial data more quickly and safely. Third, MyData services provide a more level playing field for anyone with innovative business ideas. Competition and innovation in the finan
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Mar 02, 2022
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Mar 02, 2022
- KoFIU Unveils 1st Comprehensive Survey Result on Domestic Virtual Asset Market
- The Korea Financial Intelligence Unit (KoFIU) has conducted its first comprehensive survey on 29 virtual asset service providers to have better understanding of the market based on the statistical data provided by individual business operators. Overview As of the end of 2021, the total market capitalization of the virtual asset market in Korea stood at KRW55.2 trillion with the average daily transaction volume amounting to KRW11.3 trillion. As of the end of December 2021, a total of 29 virtual asset service providers (4 KRW-based exchange platforms, 20 coin-only exchange platforms and 5 crypto wallet or depository service providers) were given an approval to operate their business according to the Act on Reporting and Using Specified Financial Transaction Information.Among them, the 5 wallet or depository service providers have been excluded from this survey as they were found to be at an early stage of business operation, thus offering no statistically significant data to the survey. The following are key findings from the survey which include key statistical data about the market size, number of virtual assets being traded, user characteristics, etc. Key Findings I. Virtual asset exchange platforms (Trade volume) In the second half of 2021, the total transaction amount at 24 virtual asset exchanges amounted to KRW2.073 quadrillion with the average daily transaction amount of KRW11.3 trillion. At the end of December 2021, the total market capitalization of virtual assets being traded by 24 crypto exchanges stood that KRW55.2 trillion. The KRW-based exchange markets average daily trading amountwas KRW10.7 trillion (or about 95%) whereas that for the coin exchange market was about KRW0.6 trillion (5%). (Transaction fee) The average transaction fee being charged at a virtual asset exchange was 0.17 percent, which is relatively high in comparison to stock trading fees. Depending on individual platforms, the transaction fee rate ranged from a minimum of 0.05 percent to
