Press Releases - Financial Services Commission

Press Releases

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Mar 31, 2022

FSC to Seek Gradual Normalization of Temporary Deregulatory Measures in Financial Sectors

The FSC held discussions on the current status and further plans for the temporary easing of financial regulations during its regular meeting held on March 30. The FSC reviewed the status on the 25 deregulatory measures and decided to grant a three-month grace period on the 7 deregulatory measures that are scheduled to expire at the end of March.After a review, considering the recently extended availability of the loan maturity extension and payment deferment program for SMEs and small merchants, the FSC decided to provide a three-month grace period on all 7 deregulatory measures and to take a two-pronged approach to normalization after the grace period expires by carrying out (a) a step-by-step normalization of the total liquidity coverage ratio (LCR) in the banking sectorand (b) an immediate rollback on the other 6 measures that are expected to place not much compliance burden on the financial sector. Background The FSC and the FSS have introduced the measures for temporary easing of financial regulations in response to COVID-19 in April 2020.The FSC has held decisions on these 25 temporary deregulatory measures including regulations on capital requirement, liquidity requirement and those relating to business operation over four regular meetings.Thus far, the temporary deregulatory measures have provided the financial industry with the capacity to actively implement the loan maturity extension and payment deferment for SMEs and small merchants hit by the COVID-19, while making a contribution both directly and indirectly to the expansion of capital flows to support the real economy via corporate lending. Need for Gradual Rollback Key Details The FSC decided that it is time to begin a gradual normalization of the temporary deregulatory measures as the size of total credithas grown and in order to be prepared for a potential default with these measures being in place for about two years. In its decision, the FSC also considered factors such as global interest rate hi
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Nov 22, 2021

Additional Types of Public Financial Data Made Available through Open APIs

The FSC announced an expansion in the availability of public financial data offered through open APIs at www.data.go.kr. From November 22, public financial data managed by the Korea Exchange, Korea Financial Investment Association, Korea Life Insurance Association, General Insurance Association of Korea and Korea Inclusive Finance Agency will be opened up for use at www.data.go.kr through 18 standardized APIs with 40 functions. Since launching the public financial data platform in April 2019, which began to offer data managed by nine state-backed financial institutions and relevant agencies, the FSC has worked on making more types of public financial data available for a wider use. From June 9, 2020, public financial data from businesses and financial companies became available through open APIsand in September 2020, the authorities along with relevant institutions agreed to promote further opening of public financial data and facilitate its use in the private sector. As a follow-up measure to the last years agreement, the authorities will further open up public financial data managed by the five aforementioned institutions to promote big data analytics through data convergence, etc. The newly added data types include information about stocks and bonds, funds, insurance products, microloan products, etc. The authorities expect that opening up financial data stored and managed by public financial institutions and relevant agencies will help promote innovation and contribute to job creation in the private sector. The authorities will continue to work to meet data demands and seek improvements in the provision of public financial data. * Please refer to the attached PDF for details.
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Sep 03, 2021

FSC Proposes Legislative Changes to Enhance Corporate Disclosure and Investor Protection

The FSC proposed revisions to the Financial Investment Services and Capital Markets Act and its subordinate statute with an aim to improve the corporate disclosure rules and enhance investor protections. The revision proposal is a follow-up measure to the governments plans to stamp out unlawful and unfair trading activities and to improve corporate disclosure rules announced in October 2020 and January 2021, respectively.The revision proposal will be put up for public notice for 40 days from September 3 to October 13, 2021. Key Revisions for Improving Corporate Disclosure Rules a) Strengthen the effectiveness of monetary sanction on violation of the so-called five percent rule which requires investors holding five percent or more of equity securities of a listed company or those changing their holding status by one percent or more in the company to file a report with the FSC and the KRX within five days of such change taking place by raising the maximum fine from 1/100,000 of market capitalization to 1/10,000 of market capitalization b) Enhance disclosure rules for issuing private convertible bonds (CBs) or bonds with warrants (BWs) by requiring companies to file material disclosure at least one week prior to the payment due date in order to make relevant information available to investors in advance c) Require newly listed companies to submit their quarterly and semi-annual reports covering the accounting period immediately preceding their listing to make relevant information available to investors d) Require companies that decide to issue perpetual bonds to file material disclosure within one day from making such decision to strengthen investor protection e) Improve penalty standards for violating the periodic and material disclosure requirements by adjusting the level of fines that can be imposed on both listed companies (between KRW1 billion and KRW2 billion) and non-listed companies (from maximum KRW2 billion to maximum KRW1 billion) for the purpose of imposing
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Jul 06, 2021

FSC Holds Symposium on COVID-19 Financial Policy

The FSC and the Korea Institute of Finance co-hosted a policy symposium on the effectiveness of COVID-19 financial policy on July 6. FSC Chairman Eun Sung-soo attended the symposium and delivered a keynote address highlighting the progress of policy implementation and future policy direction. The following is a summary of Chairman Euns remarks. (COVID-19 Crisis Policy Response) In the wake of the COVID-19 pandemic, the government rolled out policies focusing on the prevention of risk transfer channels, provision of an exhaustive level of support and setting up firewalls in financial markets to help remove market anxieties. The authorities worked on stock market and bond market stabilization measures while prioritizing support for small-scale businesses. Financial support was extended to businesses of all sizes that have been hit by the pandemic. The KRW175 trillion-plus COVID-19 financial support programs were introduced to contain fear and anxiety in markets. This unprecedented level of financial support by the government helped to quickly stabilize the financial system, provide liquidity to small merchants and SMEs while preventing large-scale bankruptcies or job losses in key industries. As a result, the Korean economy saw the smallest negative growth last year while stock markets continue to set new record highs. In March this year, the IMF stated that Koreas decisive policy response has helped the country navigate the COVID-19 shock. (Future Policy Direction) In order to overcome the pandemic-induced crisis and be prepared for potential aftershocks, an orderly process for policy normalization is necessary. First, the government will maintain close monitoring on the status of virus prevention, real economy and financial market conditions as there still exist uncertainties, such as the spread of COVID variants. Second, the government will work to ensure financial stability by preemptively managing potential risk factors, such as an excessive accumulation of debt.
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Jul 02, 2021

Government to Closely Manage Risk of Rate Hike and Maintain Support for Small Businesses

Vice Chairman Doh Kyu-sang presided over the 40th financial risk assessment meeting via teleconference on July 2 and discussed the effects of looming interest rate rises on financial markets and post-pandemic transition policies. The following is a summary of Vice Chairman Dohs remarks. (Risk from Interest Rate Hike) There are growing expectations for both domestic and global economy to recover from the pandemic following a strong economic rebound seen in the U.S. However, the prospect for rate hikes poses a new challenge to economies. The Fed in June indicated that it has begun discussions on tapering and the Bank of Korea has continued to suggest the possibility of rate hikes within this year. For market participants that have largely become accustomed to the low interest rate environment, it is time to manage risks associated with possible increases in interest rates. Rate hikes are expected to have considerable effects on asset markets that have surged to record high levels on the back of abundant liquidities around the world. Unlike stock markets backed by strong fundamentals, the virtual asset and real estate markets are forecast to experience significant impact from monetary tightening. The virtual asset market is showing extremely unstable trends and housing prices surged to record levels by historical standards. Last week, the Bank of Korea identified recent asset price hikes as the main factor behind the financial vulnerability index reaching a record high level since the 2008 global financial crisis. In particular, the housing price increase in Korea in relation to income growth was found to be two to three times above the levels seen in major economies. As such, it is necessary to stay alert as experts warn about the risks of shifting monetary policy. To help mitigate risks originating from excessive debt, the government will work on effective implementation of policies, such as the application of DSR on individual borrowers. In this regard, financial in
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May 29, 2021

FSC Chairman Delivers Opening Remarks at the Green Finance Special Session of P4G Seoul Summit

FSC Chairman Eun Sung-soo delivered opening remarks at the special session on green finance held on May 29. Please see below for the full text of the speech. I. Introduction Good evening, everyone. Good afternoon, Europe. Good morning, America. Welcome to the 2021 P4G Seoul Summit Special Session on Green Finance. The world is still in the midst of the Covid-19 crisis. Covid-19 is not an individuals problem, nor a regions or a countrys problem. It is the whole humanitys problem. Likewise, climate change is everyones problem. In this regard, P4G puts emphasis on the value of partnerships across all sectors. I hope P4G Seoul Summit can induce everyone to take part in climate action. II. Why Green Finance? Achieving carbon neutrality involves a fundamental restructuring of industry. This might require trillions of dollars across the world. Many countries including Korea, have announced large-scale fiscal stimulus under Green New Deal schemes. However, public finance alone cannot cover the scale of investment we need. MDBs and private sector investors need to get involved as well. In a different angle, the financial industry can induce companies to lessen their environmental impact by altering the lending or investing criteria. For example, BlackRock, the worlds largest asset manager, evaluates a companys ESG performance when making an investment decision. III. Progress of Green Finance Green finance has been rapidly taking root in the global financial market over the past years. By the end of 2020, around 3,000 institutional investors have joined the UN Principles for Responsible Investment. Globally, ESG fund assets are nearing $2 trillion. Also, quarterly issuance of green bonds has risen to $150 billion. South Korea is also actively stepping up efforts to promote green finance. Last year, the government pledged to double the share of funding for green projects in public financial institutions by 2030. We are also planning to gradually make ESG data disclosures manda
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May 24, 2021

FSC Holds Policy Workshop to Discuss Progress of Policy Implementation and Tasks Ahead

The FSC held a policy workshop on the progress of financial policy implementation of the Moon Jae-in administration at its fifth year on May 20, discussing some of the key policy achievements made in the past four years as well as the remaining tasks. The policy workshop was attended by all FSC employees and key members of the financial development review committee. Policy Achievements I. Preemptive crisis response helped to ease uncertainties and ensure stability a) Prompt implementation of COVID-19 response measures helped to prevent a spread of financial crisis. - The KRW175 trillion-plus COVID-19 financial support programs introduced, which include (i) stronger lending support for SMEs and small merchants hit by COVID-19, (ii) emergency liquidity support for businesses facing temporary liquidity shortages and (iii) the bond market and stock market stabilization funds. b) The growth of household debt has been stably managed. - Mortgage rules tightened to curb speculative demand in the housing market (Aug. 2, 2017) - Stronger mortgage rules applied on multiple homeowners to cool down speculative demand (Sep. 14, 2018) - Prohibition of mortgage loans introduced on homes valued over KRW1.5 billion in speculative areas (Dec. 16, 2019) - Gradual application of DSR rules introduced on individual borrowers (Apr. 29, 2021) c) Continuous efforts have been made on corporate restructuring - Corporate restructuring fund created in the amount of about KRW3.2 trillion between August 2018 and April 2021, which made investments of about KRW1.8 trillion so far - Pursued restructuring of maritime shipping and airline industries II. Encouraged a shift in flow of funds towards productive sectors through financial innovation and supply of venture capital a) Expanded the supply of funds to innovative sectors by making improvements to the corporate credit evaluation system and the capital market rules - Corporate credit rating system changed to take into account the future growth poten
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May 06, 2021

Adjustments Made to the Corporate Bond and CP Purchase Program for Low-rated Companies

The FSC and the state-backed financial institutions announced that they will bolster support for low-rated companies through the pandemic-related support measures already put in place last year, which include a special purpose vehicle (SPV) aimed at purchasing low-rated corporate bonds and CP, primary collateralized bond obligations (P-CBOs) and the corporate bond and CP refinancing support program. In response to the spread of market anxieties in the wake of the COVID-19 pandemic, the government launched the corporate bond and CP market support programs covering businesses with credit ratings ranging from AA or above to A to BB. As a result, the corporate bond and CP markets have been stable thus far. However, there have been rising concerns about credit downgrades, limited support available through P-CBOs and the redundancy in the utility of some of the programs. As such, the authorities will make following adjustments to the programs to bolster support for SMEs. Key Measures (Support for low-rated businesses) First, more flexible eligibility requirements will be applied to low-rated companies. For the so-called fallen angels whose credit rating has declined after the announcement was made on the governments plan to operate an SPV on April 22, 2020, the provision of support will continue to be available for BB rated companies. For companies facing the risk of credit downgrades, state-backed financial institutions will provide comprehensive consulting services on their management status, financial structure, etc. (Temporary expansion of P-CBO support) First, individual companies sales cap will be expanded for SMEs that have seen their sales drop fifty percent or more and for low-rated (BB ratings) SMEs. The current standard of measuring their sales performance that is based on the estimated sales expected for the upcoming year will be changed to an arithmetic mean from the past three years. The sales cap on low-rated SMEs will also be expanded based on their fields
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May 03, 2021

Authorities to Expand Support for Corporate Bond and CP Markets

Vice Chairman Doh Kyu-sang held the 39th financial risk assessment meeting virtually on May 3 to review the implementation of the COVID-19 financial support programs for small merchants and SMEs. At the meeting, Vice Chairman Doh discussed ways to increase support for the corporate bond and CP markets and help businesses struggling with temporary credit rating downgrades. The following is a summary of Vice Chairman Dohs remarks. (Current Situation) Recent economic indicators suggest that the pace of the recovery back to the pre-pandemic level is taking place faster than previously expected. The IMF has recently revised up global growth forecast from 5.5 percent in January to 6.0 percent in April, and the recovery is accelerating in Korea backed by strong exports. However, a multi-speed recovery is becoming more apparent across different sectors as small merchants and self-employed business owners, especially in close contact businesses, continue to experience difficulties. As such, todays meeting will go over the progress of the existing financial support programs and find ways to draw up more targeted support for vulnerable areas in response to the multi-speed recovery taking place. (COVID-19 Financial Support) The financial sector has drawn up KRW81.5 trillion in lending support for small merchants and SMEs and KWR73.5 trillion in backstop for financial markets. With the spread of the vaccine supply and expectations for a recovery, the authorities also set up a diagnosis-response framework to more effectively work on the normalization of COVID-19 financial support measures. Based on these response measures, the authorities plan to regularly monitor conditions, make appropriate adjustments and strengthen the provision of targeted support on vulnerable areas. The COVID-19 financial support for small merchants and SMEs has extended about KRW78.3 trillion in lending support. The second batch of lending support in the amount of KRW7 trillion has so far extended about K
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Apr 08, 2021

Government to Set up Diagnosis-Response Framework for COVID-19 Financial Measures

Vice Chairman Doh Kyu-sang held the 38th financial risk assessment meeting via teleconference on April 8 to review risk factors in the economy and financial markets and discuss the establishment of a diagnosis-response framework for COVID-19 financial support measures. The following is a summary of Vice Chairman Dohs remarks. (Current Economic and Market Situation) There are signs of an economic recovery this year with strong exports and improvements in industrial output. The expectation for recovery is also growing as international organizations have revised up their growth forecasts for 2021. However, as the number of new infection cases has been on the rise recently, many small-sized businesses and self-employed are still experiencing difficulties. At the same time, there are rising concerns about uncertainties in financial markets as liquidities around the world have grown to unprecedented levels. In this regard, the IMF and the FSB suggested the importance of risk management in financial sectors while also stressing the need to maintain adequate provision of financial support. Major economies are gradually adjusting their policies. The Chinese government is seeking to control liquidities and property market overheating. The US and Japan have rolled back some of the financial support measures while continuing with policies for recovery. Against this backdrop, the Korean government has also sought multidimensional ways to improve the COVID-19 financial response measures with a mid- to long-term perspective. As such, todays meeting will discuss ways to improve our COVID-19 financial response framework. (Diagnosis-Response Framework on COVID-19 Financial Measures) The government will set up a diagnosis-response framework on COVID-19 financial measures. First, a working group will be established to systematically and regularly monitor various indicators on virus prevention and quarantine, the real economy and financial sectors. Based on the working groups diagnosis
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Mar 25, 2021

FSC to Closely Monitor Market Situations and Gradually Roll Back Crisis Response Measures

Vice Chairman Doh Kyu-sang held the 37th financial risk assessment meeting via teleconference on March 25 and discussed the progress in the implementation of the COVID-19 financial support for small merchants and SMEs. The following is a summary of Vice Chairman Dohs remarks. (Pandemic Response Measures) In response to the COVID-19 pandemic, the government implemented a KRW175 trillion-plus emergency financial support package to provide support for small merchants and SMEs, stabilize financial markets and help businesses in key industries with liquidity shortages. Thanks to the active support shown by the financial institutions, markets quickly bounced back and financial difficulties experienced by small merchants and other vulnerable groups began to ease. On the Korean governments bold response to the crisis situation, the IMF in January this year released a positive assessment, and the OECDs recent growth forecast expects Korea to achieve a full recovery within this year. Bold and preemptive responses were effective given that the scale of policy response had to exceed market expectation at a time when extreme anxieties were spreading across markets. However, with signs of an economic recovery in the US, inflation expectations have been rising as well as the long-term bond yields. In this regard, the government will closely monitor market situations and work on preemptive management to prepare for a possible rate hike in domestic markets. In addition, there have been growing concerns about inappropriate trading activities in stock markets. There are active discussions going on in this regard at the National Assembly to strengthen penalties on unfair and inappropriate trading activities, such as price rigging. The government will closely cooperate with the relevant institutions to work on the prevention of inappropriate trading activities. (Maturity Extension Payment Deferral) Since April 1 of last year, all financial institutions made available maturity extensions
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Feb 26, 2021

FSC Announces Korea's Risk-free Reference Rate

Vice Chairman Doh Kyu-sang held the 35th financial risk assessment meeting and 3rd taskforce meeting on benchmark interest rate reform via teleconference on February 26. At the meeting, Vice Chairman Doh announced the authorities selection of the overnight repo rate of government bonds and monetary stabilization bonds as Koreas new risk-free reference rate (RFR). The following is a summary of Vice Chairman Dohs remarks. (Transition from LIBOR) The uncertainty surrounding the continuing availability of LIBOR beyond the end of 2021 requires financial institutions and businesses to be thoroughly prepared. In this regard, financial institutions and businesses are recommended to refrain from making new contracts based on LIBOR after the end of this year to minimize risks. For the current LIBOR-based contracts with maturities extending beyond the end of this year, fallback provisions should be added prior to the third quarter of this year. The financial authorities along with the relevant institutions have been operating a taskforce to prepare for the discontinuation of LIBOR under the auspices of the working group on reforming benchmark interest rate. The authorities will work for a seamless and systematic transition from LIBOR, ensure that financial institutions have adequate consumer protection measures in place and regularly monitor the financial institutions LIBOR exposures, response plans, etc. (Selection of RFR) The working group on benchmark interest rate reform has completed the selection of a RFR after a year and eight months of the selection process. After a series of discussions and votes by a market participants group,the working group has selected the overnight repo rate of government bonds and monetary stabilization bonds as the RFR. The repo markets abundant liquidity and its expandable use in derivatives markets were the main reasons for selection. After additional discussions on the calculation method of RFR, the Korea Securities Depository which current
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Feb 22, 2021

FSC to Strengthen Liquidity Management of Specialized Credit Finance Companies

The FSC announced a set of measures aimed at strengthening the liquidity management of specialized credit finance companies on February 22. The measures include (a) establishing best practice guidelines, (b) strengthening disclosure requirements and (c) gradually reducing the maximum leverage on credit finance (non-credit card) businesses. Background Specialized credit finance businesses are lenders without deposit-taking functions.They usually finance their business through borrowings or the issuance of corporate bonds and asset-backed securities (ABS). In particular, their heavy reliance on debt finance, about 73.9 percent of their financing,creates a problem of risk transfer to financial institutions holding their corporate bonds, especially if credit finance companies face solvency problems. In this regard, there have been concerns about credit finance companies turning into a conduit of systemic risk in times of an unexpected economic shock such as COVID-19. Therefore, liquidity problems of credit finance businesses can pose a risk not only to the borrowers with mid-to-low credit backgrounds but also to the real economy as they may cause a drop in consumption and corporate facility investment. Key Measures I. Best Practice Guidelines on Liquidity Management The best practice guidelines on specialized credit finance companies liquidity management will be introduced for implementation beginning in April this year. - (Target) Bond issuing credit finance companies and those with more than KRW100 billion in total assets will be subject to the new guidelines. - (Role of Board and Management) Board of directors should oversee the establishment and operation of liquidity management strategies and the company management should prepare specific management process and criteria and regularly report to its board members. - (Liquidity Risk Indicators) Major liquidity risk indicators include corporate bond maturity distribution, liquid asset ratio, short-term debt ratio, etc.
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Feb 01, 2021

FSC Announces Plans to Improve Competitiveness of Publicly Traded Funds

The FSC unveiled specific plans to improve the competitiveness of the publicly traded fund market on January 29, with an aim to make the sales and management process more investor-oriented. The plans include (a) increasing the accountability and efficiency of fund management, (b) making the sales process more investor-oriented, (c) encouraging the introduction of diverse types of funds and (d) strengthening support for investors. BACKGROUND Publicly traded funds serve as an importance source of asset management for the general public, allowing small-sum investment and fit for medium risk/medium return appetite. They are also important as they provide capital to productive sectors and help to spread out the real estate-oriented household asset structure. However, the volume of publicly traded funds has stagnated recently as retail investors have become less inclined to invest in publicly traded funds due to the availability of private equity funds, equity-linked securities and other competitive products as well as the relatively low returns, cost burdens related to sellers compensations and fees, inappropriate fund management practices, etc. Meanwhile, amid a low interest rate environment and abundant market liquidity, the general publics interest in financial investment has grown, particularly in direct investing. Over the past 10 years, the volume of private equity funds grew 268.3 percent while that of publicly traded funds rose only 38.3 percent. Stock funds except exchange-traded funds (ETFs) fell 53.2 percent while ETFs and money market funds (MMFs) rose 759.0 percent and 57.3 percent, respectively. The stagnant development of the publicly traded fund market can be attributable to (a) the subpar performance of fund management in generating returns, (b) the declining trust on fund sellers, (c) the lack of diversification in the types of funds and (d) the lack of adequate support for investors. Against this backdrop, the authorities will seek following strategies
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Jan 25, 2021

Green Finance to Support 2050 Zero Carbon Goals

Vice Chairman Doh Kyu-sang held the 3rd green finance taskforce meeting via teleconference on January 25 and unveiled the governments plans to promote green financing in 2021, which include strengthening the role of the public sector, promoting green financing in the private sector and improving the regulatory framework. At the meeting, Vice Chairman Doh emphasized the importance of the governments 2050 zero carbon initiative and called for close cooperation from all financial sectors. KEY PLANS A. STRENGTHEN THE ROLE OF THE PUBLIC SECTOR 1) Prepare an investment strategy for state-backed financial institutions to double their investment in green sectors from the current 6.5% to about 13% (H1 2021) and consider the launching of a new green finance lending program once the K-taxonomy on green industries becomes available 2) Create green financing teams within the state-backed financial institutions to improve their work consistency and promote cooperation across different institutions 3) Launch a consultative body on green financing between different state-backed financial institutions (H1 2021) to help draw up an integrated strategy on green financing, promote information sharing and boost ties with the international society while preparing for the 2021 P4G Seoul Summit 4) Seek revisions to the guidelines on the management of water resources funds (H2 2021) to ensure that the green and environmental indicators are taken into account when selecting fund managers B. PROMOTE GREEN FINANCING IN THE PRIVATE SECTOR 1) Develop K-taxonomy to clearly distinguish between green and non-green industries and activities (H1 2021) and seek improvements to the system (H2 2021) 2) Introduce best practice guidelines on green financing to be equally applied to all financial sectors (H1 2021) and promote an internalization of the rules after an adjustment period 3) Pilot the issuance of green bonds according to the green bond issuance guidelines announced in December last year 4) Draw
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Jan 19, 2021

FSC Announces 2021 Work Plan

The FSC unveiled its work plan for 2021 on January 18, highlighting the four areas of policy tasks as follows(a) maintaining the COVID-19 financial support and managing potential risks, (b) supporting K-New Deal initiatives for a green and digital economy, (c) promoting financial innovation and digital finance and (d) strengthening financial consumer protection and support for vulnerable groups. KEY ACHIEVEMENTS IN 2017-2020 A. STEADY MAINTENANCE OF FINANCIAL STABILITY AMID COVID-19 PANDEMIC Over the past four years, the FSC has focused on maintaining stability in the financial system as its utmost policy priority. In the wake of the COVID-19 pandemic, the FSC responded by quickly drawing up and providing financial support packages worth KRW175 trillion-plus and worked to prevent the crisis from spreading further into the financial markets. B. SUCCESSFUL CHANNELING OF FUNDS TO PRODUCTIVE SECTORS The FSC has worked to expand the supply of capital into more productive sectors by introducing innovative ways to assess corporate credit and through revisions to the relevant capital markets rules. In addition, the public sector has provided equity-based funding sources via growth ladder fund and other government-backed financing channels. C. ACTIVE PROMOTION OF COMPETITION AND INNOVATION IN FINANCIAL INDUSTRY The FSC has granted new business licenses to internet-only banks, insurance firms and real estate trust companies based on an industry-level competition assessment. In order to promote and expand financial innovation, the FSC has also worked to establish the necessary infrastructures, including the regulatory sandbox, open banking and MyData in financial services. D. ENHANCED INCLUSIVENESS VIA MICROFINANCE SUPPORT AND CONSUMER PROTECTION The FSC has worked to reduce the interest payment burdens of lower income households by lowering the maximum interest rate that can be charged on loans from 24% to 20%. E. IMPROVED FAIRNESS BASED ON RULES AND PRINCIPLES The FSC has al
Jan 12, 2021

Government Announces KRW650 Billion Investment in KAMCO to Support Corporate Asset Sell-offs

The government announced its decision to make in-kind contribution of KRW650 billion in the Korea Asset Management Corporation to facilitate its operation of the corporate asset purchase program on January 12.The KAMCO has been operating the corporate asset purchase program mainly through bond issuance, which has led to a rise in its debt ratio in 2020 compared to the previous year. The government’s in-kind contribution in this regard will help contain the KAMCO’s debt ratio within 200 percent until 2022.The in-kind contribution of KRW650 billion raises the government’s total investment in the KAMCO from KRW580 billion to KRW1.23 trillion.With this capital increase, the government expects that the KAMCO will be able to provide more steady support for companies in need of asset sell-offs.* Please refer to the attached PDF for details.
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Dec 24, 2020

Government Extends SPV Operation for Six Months to Ensure Continuing Support

The government, the Bank of Korea and the Korea Development Bank decided to extend the operating period of the special purpose vehicle set up to purchase low-rated corporate bonds and CP for six months until July 13, 2021.The SPV was launched on July 14, 2020 with an initial operating period of six months until January 13, 2021. In order to strengthen support for companies facing liquidity problems, the SPV will reduce the purchasing of AA rated bonds while expanding the proportion of low-rated (A~BBB) corporate bonds. To raise the purchasing capacity of the SPV, a second capital call will be made in the amount of KRW2 trillion.The government, the BOK and the KDB will continue to maintain close cooperation to ensure stability in the financial markets.* Please refer to the attached PDF for details.
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Dec 09, 2020

FSC to Work on Risk Management and Inclusive Finance

Vice Chairman Doh Kyu-sang held the 31st financial risk assessment meeting via teleconference on December 9 and discussed the year-end financing situation of businesses as well as the outlook for financial markets in 2021 and risk preparation. The following is a summary of Vice Chairman Doh’s remarks.(CURRENT MARKET SITUATION) Financial markets have been enduring difficulties presented by the protracted COVID-19 pandemic. The OECD projects Korea’s economic growth in 2020 to be the highest among its members and second to China among the G20 economies. KOSPI rose to a record high of 2,700 points on December 4 and KOSDAQ’s market capitalization is continuing to set new record highs. The corporate bond market also shows a smooth interplay between demand and supply with interest rates at stable levels. In terms of the recent surge in stock markets, some KRW60 trillion net buying by retail investors this year contributed most to the quick recovery of stock markets. In this regard, the government will continue to work for the fairness and transparency in stock markets and to foster trust from market participants.(ASSESSING RISK FACTORS) With the availability of vaccines in major economies, there are expectations for normalization. However, it may take a long time to reach a level of herd immunity given the time it takes for mass production and distribution of vaccines. Thus, excessive optimism should be cautioned against and various risk factors should be closely monitored. While many countries are maintaining expansive fiscal and monetary policies at unprecedented levels, BIS and IMF warned against the rise of asset prices detached from the real economy, concentration of liquidity and expansion of leverage. The rise of high-risk asset investments amid an ultra-low rate environment also poses a risk. The financial authorities will closely monitor these risk factors and respond promptly when necessary.The authorities will also keep a close eye on the business and hous
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Nov 26, 2020

FSC to Work on Preventing Economic Shocks and Managing Financial Market Risks

Vice Chairman Doh Kyu-sang held the 30th financial risk assessment meeting via teleconference on November 26 to check the implementation of the COVID-19 emergency financial support programs. At the meeting, Vice Chairman Doh also discussed the current financial market conditions and potential risks, credit lending in the banking sector and the government’s plans to extend the period of support available for vulnerable debtors.The following is a summary of Vice Chairman Doh’s remarks.(CURRENT ECONOMIC CONDITIONS) In November, consumer confidence and business survey index rose while exports increased for a second consecutive month. KOSPI rose to a record high of 2,617.76 points on November 24 on strong foreign net buying. The corporate bond and short-term money markets also show signs of stability. The low-rated corporate bond and CP purchase program (SPV) launched in July helped to improve market conditions. While considering the past performance and market conditions, the FSC will decide in December whether to extend the operation of the SPV beyond its initial six-month period.(POTENTIAL MARKET RISKS) The Korean economy and domestic financial markets have shown speedy recovery from the pandemic due to the government’s aggressive stimulus programs and abundant liquidity supply. However, household loans have expanded more rapidly in that process. Amid an ultra-low rate environment, high-yield hunting in stock and real estate markets and more recently in cryptocurrencies may pose risks. The resurgence of COVID-19 infection cases throughout the world may hold back economic recovery and the uncertainty surrounding major economies’ stimulus measures also pose risks. Against this backdrop, the FSC will work to ensure an effective management of household debt and closely monitor the flow of capital into high-risk assets.(RECENT TRENDS IN CREDIT LENDING) Since the FSC announced the measures to curb credit lending on November 13, the growth of credit loans in the bank
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