Financial stability is a prerequisite to innovation and inclusive finance policies. FSC maintains close market monitoring for any signs of market volatility and works to ensure stability in the financial markets. There are risk factors originating from abroad and from within. FSC focuses on making our economy more resilient from external shocks, such as a disruption in the global supply chain, and supporting Korea’s material, component and equipment industries to help boost their global competitiveness. Internally, FSC is closely monitoring the trends in household debt and seeking reforms to corporate restructuring in order to prevent domestic risk factors from turning into systemic risks. Policies aimed at increasing financial stability also include enhancing fairness in the financial markets by introducing a comprehensive legal framework for the supervision of financial conglomerates, improving market discipline and promoting transparency in corporate disclosure and accounting practices.
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Feb 22, 2022
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Feb 21, 2022
- FSC Chairman Discusses Ways to Make Further Improvements to Accounting Industry
- FSC Chairman Koh Seungbeom held a meeting with the heads of major accounting firms and other industry representatives virtually on February 21 and discussed the effects of the 2017 accounting reforms and the governments efforts to further improve the accounting and auditing practices. The following is a summary of Chairman Kohs opening remarks. Since the 2017 revision of the Act on External Audit of Stock Companies,the accounting industry in Korea has continued to grow with the number of certified public accountants and accounting firms rising some 20 percent and the sectors sales earnings also growing about 46 percent compared to 2017. Despite this quantitative growth shown by the accounting industry, there are still concerns about the issue of accounting transparency where inappropriate actions from a few listed firms may erode public trust built over the years. Moreover, some of the SMEs may be undergoing hardships in catching up with the accounting reforms, and the audit quality of certain accounting firms has been found to be below market expectations. Against this backdrop, the government will make efforts this year to promote qualitative growth of the accounting industry. First, the authorities will actively seek improvements to the audit quality of accounting firms through performance-based incentives and inducements for self-improvements. Second, the authorities will strengthen efforts to ensure seamless enforcement of the best practice guideline on the designation of external auditor by facilitating communication between companies and auditors and preventing the possibility of conflicts. Third, the authorities will work to ease auditing burdens of SMEs in the process of applying the current accounting and auditing standards. Fourth, the authorities will work to promote the environmental, social and governance (ESG) standards as sustainable business management is a key issue handled by the accounting sector. With the International Sustainability Standards B
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Feb 16, 2022
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Jan 27, 2022
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Jan 19, 2022
- FSC Chairman Holds Meeting to Review Debt Risks of Small Merchants
- FSC Chairman Koh Seungbeom held a meeting with officials from the Bank of Korea, Financial Supervisory Service, research institutions and local banks on January 19 to check business conditions of small-scale businesses and their debt risks as the loan maturity extension and payment deferment program is set to expire at the end of March 2022.The following is a summary of Chairman Kohs keynote address. Chairmans Remarks Self-employed small businesses make up about 87 percent of all businesses and 21 percent of economically active population in Korea. However, these businesses have suffered greatly in the past two years amid the COVID-19 pandemic crisis. The financial sector has provided them with loan maturity extensions and deferment on interest payments and it has helped to ease small merchants payment burdens on some KRW272.2 trillion worth of business loans between April 2020 and November 2021. In addition, the small merchant lending support programs made available low interest rate busines loans to those facing liquidity problems. From the end of this month, adjustments made to the card processing fee rates will also help ease small merchants fee burdens.The prolonged pandemic situation, however, has raised concerns about a spread of potential risks to the financial system. For the past two years, the speed of debt growth for the self-employed has exceeded that of the household sector. An accumulation of bad debts can threaten stability in the financial system. In particular, delays in business recovery coupled with interest rate hikes can lead to a credit crunch and pose greater problems for small businesses. The loan maturity extensions and payment deferments for small merchants and SMEs are set to expire at the end of March 2022. Although it is difficult to predict events two months ahead, it is certain that there will be contradictory policy tasks between ensuring the risk handling capacity of small businesses and strengthening risk management in the financia
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Jan 18, 2022
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Jan 17, 2022
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Jan 13, 2022
- FSC Chairman Emphasizes Stability as Key Policy Priority in Meeting with Expert Group
- FSC Chairman Koh Seungbeom held a meeting with a group of experts on January 13 and discussed potential risk factors in domestic and overseas markets and ways to properly respond to them. The expert group consisting of academia, columnists and thinktank officials discussed various issues including the need to find a new equilibrium in policy mix, deepening market volatilities, the need to manage risks in the nonbank sector, loan loss provisions of financial institutions and the shifting paradigm in global value chains. In his keynote address, Chairman Koh stated that maintaining stability in the financial system remains as top policy priority for this year. The following is a summary of Chairman Kohs remarks. Chairmans Remarks From the second half of 2021, the financial authorities have been working on measures to prepare for potential risks in markets. The Feds monetary policy changes, continuing pandemic situation, a slowdown in Chinas economic growth and dispute between the U.S. and China can have impact on the Korean economy and financial markets. In response to these potential risks, the authorities have made efforts to build foundations for easing financial imbalances by bringing down growths in new lending and housing prices. To build upon these outcomes, the authorities will first and foremost work on stable management of household debt. Unlike the previous year where the focus was on controlling the total quantity of household debt, the focus this year will be on making systemic improvements through an expanded application of the individual debt service ratio rule, etc. In the meantime, the authorities will ensure that credit extension to the financially vulnerable groups remains available. Second, the authorities will work to minimize negative effects on vulnerable debtors such as small merchants and self-employed business owners in the process of policy normalization. Looming interest rate hikes amid a continuing pandemic situation can place extra burdens
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Jan 12, 2022
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Dec 27, 2021
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Dec 23, 2021
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Dec 15, 2021
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Dec 14, 2021
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Dec 09, 2021
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Dec 08, 2021
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Dec 07, 2021
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Nov 19, 2021
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Nov 03, 2021
- FSC Proposes Rules Change to Facilitate Overseas Business Operation of Financial Companies
- The FSC announced a plan for changing rules to facilitate financial companies business operation and investment activities in overseas markets on November 3. With a growing number of financial companies expanding their business operations overseas, financial companies foreign direct investment (FDI) activities in overseas markets have also grown.The volume of financial companies FDIs has grown in terms of both direct investment for establishing overseas branches and indirect investment through foreign funds. However, the current reporting rules have often caused unnecessary burden for financial companies in their overseas investment activities due to strict filing procedures, etc. As such, the FSC plans to change rules to simplify their reporting requirements and remove unnecessary burden. Key Details a) Currently, FDIs made through foreign funds are subject to the advance reporting requirement regardless of the investment amount. However, FDIs of USD30 million or less made through overseas branches can be subject to ex post facto reporting. Both FDIs made through foreign funds and FDIs made through overseas branches will be allowed for ex post factor reporting within one month for FDIs ofUSD20 million or less. b) Currently, financial companies investing ten percent or more in equity shares of foreign funds are required to report to the FSS about any changes in their ownership status even when changes in their equity shares occur due to changes in investment amounts made by other shareholders in proportion to their own shareholding. FDIs in foreign funds will be subject to the ten percent reporting rule only at the time of making initial investment and financial companies will be exempted from further reporting duties when changes in their shareholding occur without additional investments. c) Currently, some of the routine activities by financial companies overseas branches, such as equity trading or loan transaction of more than one year, are subject to reporting d
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Nov 03, 2021
- FSC Chairman Emphasizes Consumer Protection and Discusses Role of Insurance Business
- FSC Chairman Koh Seungbeom held a meeting with the heads of insurance companies and relevant officials on November 3 and discussed the role of insurance business and importance of consumer protection. Chairmans Remarks Rapid changes taking place in the structure of demographics, rising interest rates, digital transformation and spread of platform businesses are demanding innovation from the insurance industry. In order to build a foundation for the future of the industry, it is necessary to look at the scope of insurance coverages, the sales and payout process and so on. To help promote further development of the insurance industry, the authorities provide support in the following areas. First, the authorities will provide active support for insurance companies to help strengthen the function private-sector safety net in response to demographic change. The authorities will set up a public-private joint consultative body to formulate measures for improving the indemnity health insurance system. To preemptively respond to newly emerging risks, such as the spread of infectious disease, the government will enhance inter-agency coordination to promote insurance on transmissible diseases. In addition, the authorities will look into ways to strengthen the role of pension insurance to address rapid demographic changes. Second, the government will support diversification of insurance business and their organizational models to help insurers better cope with the changing environment. Specific measures will be prepared to ease the current licensing rules to reflect diversification of consumer needs and insurance products. While continuing to work on introducing small-sum and short-term insurance products, the authorities will allow insurers to assume other related business areas that are deemed to be essential for operating new business, such as a platform-based health care-related service offering. Third, the government will support digital innovation of insurance business to
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Nov 01, 2021