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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Jul 09, 2025
- Authorities Lay Out Plans to Stamp Out Unfair Trading Activities in Stock Markets
- The Financial Services Commission, the Financial Supervisory Service, and the Korea Exchange introduced joint measures to stamp out unfair trading activities in stock markets on July 9. The financial authorities have held a series of meetings and discussions in the past month to seek ways to strengthen initial response and ensure strict punishment on unfair trading activities (price manipulation, etc.). The following measures have been prepared based on these discussions. Key Measures I. Establish a Joint Response Team to Root Out Stock Price Manipulation Under the current response system for unfair trading activities, the examination (KRX) and investigation (FSC FSS) functions are dispersed across different organizations, and they each have different levels of authority, for instance, to check financial (securities or bank) accounts or force investigation. This led to the problem of delay in responding to cases which required urgent actions from the authorities. Thus, in order to boost the efficiency in examination and investigation, the FSC, the FSS, and the KRX plan to establish a joint response team to root out stock price manipulation. The joint response team, a collaborative operation among the FSC, the FSS, and the KRX, will be set up at the KRX with an aim to bolster the initial response function of KRXs market surveillance committee. The joint response team will work under the same workspace and perform investigations on important cases that require urgent response together from the early stage. In the process, each organization (FSC, FSS, and KRX) will make utmost use of its investigative authority to promptly carry out investigations on cases associated with (a) frequent rule-breakers, (b) largest shareholder or company executives, (c) use of false information on social media, etc. II. Upgrade KRXs Surveillance System to Make It More Individually-focused (from account-based system currently) and Adopt AI Technology in Market Surveillance Under the current
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Jun 27, 2025
- Authorities Introduce Measures to Strengthen Household Debt Management Centered on Seoul Metropolitan Area
- The Financial Services Commission held a meeting on household debt on June 27 with officials from related government ministries, industry groups, and housing loan and guarantee institutions. At the meeting, officials discussed the expanding trend of household debt triggered by mortgage loans in the Seoul metropolitan area and announced a set of measures that will help to strengthen the management of household debt especially in the Seoul metropolitan area. Household Loans In recent months, the outstanding balance of household loans has been growing since April due to the rising volume of housing transactions in the wake of temporary lifting of the land transaction permit scheme in Seoul and expectation for rate cut, and this trend has continued into June. With the rise in the volume of housing transactions in the Seoul metropolitan area,mortgage loans in this region has grown rapidly in particular. Key Measures I. Bolstering Total Management Target Considering the economys nominal GDP growth forecast and the recent trend of household debt growth, the annual target volume of household loanswhich include both financial companies own loan products and government-sponsored policy loanswill be revised down from the current level. For financial companies own loan products across all financial sectors, the total annual target volume will be reduced to 50 percent of the previous level effective from the second half of this year. For policy loans, the annual supply plan will be 25 percent less than the previously set level. II. Applying Banks Self-regulatory Measures in All Other Financial Sectors The implementation of self-regulatory household debt management measures taken up by banks on a voluntary basis will be expanded to all other financial sectors. First, in the Seoul metropolitan area and/or speculation regulated zones,current homeowners (multiple-house owners or single-house owners without the intention to sell currently owned house) will not be allowed to purchase
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May 20, 2025
- FSC Announces Plan to Implement Third-stage Stressed DSR Rule as Scheduled from July 1
- The Financial Services Commission held a meeting on household debt with officials from related government ministries, industry groups, and five major banks on May 20. At the meeting, officials reviewed recent household debt situation and risk factors and discussed detailed measures for implementing the third-stage stressed debt service ratio (DSR) rule as scheduled from July 1, 2025. Moreover, the financial authorities, officials from related ministries, and financial industry groups vowed to more closely communicate and cooperate to ensure stable management of household debt. Household Loans In 2025, the trend of household loan growth remained stabled in the first quarter. However, in April, the outstanding balance of household loans across all financial sectors increased KRW5.3 trillion from the previous month (up KRW0.7 trillion), growing at a notably faster pace. In April, home mortgage loans grew at a faster pace (up KRW3.7 trillion up KRW4.8 trillion), and other types of loans including credit loans shifted back up from the decline seen a month ago (down KRW3.0 trillion up KRW0.5 trillion). This pattern of growth appears to be continuing in May. At the meeting, officials assessed that the overall growth of household loans in April was mainly due to the recent rise in housing transactions pushing up mortgage loans and the low base effect from the previous month where sales or cancellation of nonperforming debt took place at the end of the first quarter. Considering the expectation of interest rate cuts in the future and the effects of the scheduled increase in deposit insurance coverage from September 1 this year on nonbank financial institutions, officials emphasized the need to ensure a preemptive management over household debt. Implementation of Third-stage Stressed DSR Rule After coordinating with related authorities, the FSC decided to implement the third-stage stressed DSR rule* as scheduled from July 1, 2025. * The stressed DSR rule imposes a certain lev
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May 15, 2025
- Rule Change Proposed to Increase Maximum Deposit Protection Coverage to KRW100 MN from September 1
- The Financial Services Commission issued a preliminary notice of legislative revisions intended to raise the maximum deposit protection coverage on May 15. The revision proposal will enter a public comment period from May 16 to June 25, 2025. For the first time in 24 years, the revised rule will increase the maximum deposit protection coverage to KRW100 million from the current level of KRW50 million from September 1, 2025. The increased deposit protection limit will apply to both banks and savings banks whose deposit protection is covered by the Korea Deposit Insurance Corporation (KDIC) and mutual finance institutionswhose deposit protection is covered by their own federation funds. Thus, from September 1 this year, depositors are guaranteed deposit protection of up to KRW100 million in the event of a financial company turning insolvent or bankrupt and becoming unable to pay their deposits. This will not only help to strengthen protection for depositors but also alleviate the inconvenience of having to spread out savings across multiple financial institutions. Moreover, it will raise the domestic deposit protection level on a par with those seen in major overseas countries and push up the overall volume of insured deposits, which will help to shore up confidence about financial market stability. Prior to the Asian financial crisis in 1997, there were varying degrees of deposit protection coverage observed by different financial sectors, ranging between KRW10 million and KRW50 million. However, in the wake of the 1997 Asian financial crisis, blanket guarantees were temporarily introduced across all financial sectors between November 18, 1997 and the end of December 2000. In order to address the problem of moral hazard arising from blanket guarantees, limited coverages were reinstated In 2001 across all financial sectors with the maximum coverage of KRW50 million, which has remained the same for the past 24 years. Considering the level of growth seen in the economy
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Apr 14, 2025
- New Sanctions Mechanisms on Unfair Trading and Illegal Short Sale Activities to Take Effect from April 23
- The Financial Services Commission announced that the government approved the revision bill for the Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSCMA) intended to establish new sanctions mechanisms against unfair trading and illegal short sale activities at the cabinet meeting held on April 14. The revised Enforcement Decree is scheduled to go into effect on April 23, 2025 along with the revised FSCMA and subordinate regulations. Background The government has continuously worked to strengthen monetary sanctions through the introduction of penalty surcharge and the increased level of fine imposable against unfair trading and illegal short sale activities in capital markets. However, in order to more effectively prevent the recurrence of unfair trading activities, the need for introducing non-monetary sanctions mechanismssuch as an account freeze and a restriction from being appointed or serving as an executive officer at listed companieshas been called for taking examples from major overseas countries, such as the U.S., Hong Kong, and Canada. Therefore, this revision bill introduces the following non-monetary sanctions mechanisms(a) a restriction for rule-breakers from engaging in transactions of financial investment products and being appointed or serving as an executive at listed companies and (b) an account freeze (payment suspension) on the accounts suspected to have been used in unfair trading or illegal short sale activities. Key Revision Details I. Restriction from Engaging in Transactions of Financial Investment Products Application of Regulation Under the revised FSCMA, the FSC is authorized to restrict rule-breakers (those who have engaged in unfair trading and/or illegal short sale activities) from engaging in transactions of financial investment products for up to five years depending on the nature, seriousness, period, frequency, and the level of unfairly gained profits of the rule-breaking activities. In this regard,
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Mar 24, 2025
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Feb 26, 2025
- Authorities Propose Comprehensive Measures to Prevent Mis-selling of Highly Complex Investment Products
- The Financial Services Commission and the Financial Supervisory Service introduced a set of measures intended to prevent mis-selling of highly complex financial investment products on February 26. Background In the aftermath of large-scale losses incurred to investors regarding the sales of Hong Kong index-linked ELS (equity-linked security) products by domestic financial companies in early 2024, the FSS prepared the guidelines for compensations on March 11, 2024, and the banking sectors compensation programs have been in progress. As a result, the numbers of compensations being paid out to investors, of cases in which investors have agreed to the terms of compensation, and of the ratio of compensation amount on average have all continued to increase between the end of June 2024 and the end of 2024. On-site inspections conducted by the FSS revealed that most bank branches had no clear distinction of counters between the ones selling highly complex financial investment products and those handling ordinary deposit-taking functions. As a result, great numbers of consumers could have been misled into believing that these highly complex financial investment products were principal-guaranteed products. Moreover, their sales practices revealed that financial companies placed a higher priority on sales performance rather than on the compliance of sales regulations. As a consequence, there was inadequate information provided to investors regarding the risk associated with highly complex financial investment products, and the sales of ELS products took place without the establishment of sufficient internal control mechanisms designed to prevent mis-selling and ensure protection of consumers. Against this backdrop, the FSC and the FSS have prepared measures to prevent mis-selling of highly complex financial investment products after having a series of meetings with related experts and industry groups. Key Measures a) Making improvements to financial investment products sales c
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Dec 19, 2024
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Dec 19, 2024
- FSC and FSS Announce Measures to Ensure Market Stability and Bolster Support for the Real Economy
- The Financial Services Commission and the Financial Supervisory Service announced on December 19 a set of measures intended to ensure financial market stability and enhance the financial sectors capacity to support domestic businesses and the real economy in preparation for a potential expansion of market volatility caused by ongoing uncertainties at home and abroad. After having a series of market monitoring and industry group meetings with financial companies, the capacity enhancement measures for financial companies soundness, liquidity, and financial conditions have been drawn up well within the scope of international standards, such as the Basel III framework. First, the stress capital buffer requirement for banks that was initially set to be introduced this year will be postponed until the second half of 2025. Authorities will reexamine the exact timeline and method for introducing stress capital buffers in the first half of 2025. Second, with regard to the foreign exchange (FX) positions of banks, the non-hedgeable types of FX positions, such as investments on overseas branches that are not significantly exposed to the risk of short-term volatility in the FX market, will not be counted toward the calculation of their FX risk exposures. Third, when insurance companies make contributions to the stock market stabilization fund through purchase of the fund, the amount being calculated toward the risk exposure of their K-ICS (Korea Insurance Capital Standard) ratios will be reduced from the entire amount to half the amount. Moreover, the following measures have been prepared to lower the burden of financial companies in issuing loans and investing in domestic companies, thereby enhancing financial companies capacity to support domestic businesses and the real economy. Fourth, changes will be made to the 400 percent risk weight currently applied across the board on new technology investment funds, venture funds, and other types of investment association funds estab
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Dec 16, 2024
- FSC Chairman Holds Meeting and Calls for Continuous Efforts at Market Stability and Policy Implementation
- Chairman Kim Byoung Hwan of the Financial Services Commission convened an extended senior officials meeting on December 16 to discuss current situation and response strategies. The following is a summary of Chairman Kims remarks. A Summary of Chairmans Remarks In response to current political situation, the governments top priority has been to leave no vacuum in the administration of state affairs. In this regard, as public servants overseeing the countrys financial policies, financial officials should continue to carry out their responsibilities with a sense of duty. In order to boost confidence in the market and ensure external creditworthiness, it is necessary to have continuous efforts to ensure market stability and implement policies in a consistent way. Although market conditions have recently become less volatile, it is still necessary to stay vigilant and maintain a 24-hour market monitoring system, while continuing to closely communicate with financial companies and investors at home and abroad. In particular, officials are asked to quickly review suggestions raised from the financial industry for ensuring market stability, such as the potential of postponing the implementation of stress capital buffers, and promptly announce what can be done as soon as possible starting from this week. To help small merchants and self-employed business owners with their financial difficulties, it is necessary to introduce the measures intended to reduce the burden of card processing fees as they have been initially planned for this week. In addition, officials are asked to closely coordinate with the banking sector to make sure that we can announce within this month new support measures, such as a debt workout program for non-delinquent business owners and those undergoing business closure. To ensure that businesses face no difficulties in raising funds, officials are asked to closely check the financing situation of businesses by their size and gather opinions from relate
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Dec 10, 2024
- FSC Chairman Holds Meeting with Foreign Financial Companies
- Chairman Kim Byoung Hwan of the Financial Services Commission met with officials from foreign financial companies on December 10 to have talks on recent political and economic situations in Korea and to assure that the Korean government has sufficient capacity to ensure stability in financial markets. At the meeting, Chairman Kim emphasized that despite increased political uncertainties, the countrys economic issues are being managed in a consistent and stable manner with the Deputy Prime Minister leading the governments economic team. Chairman Kim also said that the government has maintained a high level of preparedness for the implementation of market stabilization measures, and that key policy agendas, such as the soft-landing of the real estate project finance market, Corporate Value-up Program, and capital market reform initiatives, will continue to be pursued according to the previously set schedule. In this regard, Chairman Kim said that the government will make efforts to more closely communicate with foreign financial companies to provide adequate explanations about the ongoing situations and the governments plans. The officials from foreign financial companies attending todays meeting expressed a view that the current political situation will not significantly affect the fundamentals of the Korean economy or have negative impact on the economy on a continuing basis. They showed expectations that as long as the current political uncertainty is resolved quickly, financial markets will also return to stability in no time. However, to help ease short-term volatility in the stock market, participants also raised a view that it is necessary for institutional investors, such as pension funds, to play a more active role in the market. * Please refer to the attached PDF for details.
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Dec 10, 2024
- Plan for Promoting the Benchmark Rate Reform in 2025
- On December 10, the Financial Services Commission and the Bank of Korea held the 5th Benchmark Rate and Short-Term Financial Market Consultation with related organizations, such as the Financial Supervisory Service, the Korea Securities Depository, and the Korea Exchange, as well as academics and market experts, to discuss the Plan for Promoting Benchmark Rate Reform in 2025. Progress of Benchmark Rate Reform in 2024 The benchmark rate is an interest rate that is used to determine the value of money or financial instruments to be paid or exchanged as a result of a financial transaction. It is used to determine the profit or loss of financial transactions, evaluate investment performance, and generally represent the costof short-term financing for financial institution. In major countries, the global benchmark rate reform process, triggered by the LIBOR manipulation case in June 2012, firmly established the actual transaction-based risk-free rate (RFR) as the benchmark rate for financial transactions focusing on derivatives transactions. In 2020, Korea enacted the Act on the Management of Financial benchmarks in accordance with the recommendationsof international organizations such as the Financial Stability Board, and started calculating the Korea Overnight Financing Repo Rate (KOFR) as a critical benchmark rate in 2021. However, the efforts of the KOFR activation went slowly due to the need to prioritize financial market stability during the global liquidity reduction process that began in 2022. In 2024, the government and the Bank of Korea began discussions on revitalizing the KOFR based on stable market conditions and formed a joint public-private working group while strengthening communication with market participants. In August 2024, the government and the Bank of Korea announced the principle of transitioning to a KOFR-centered benchmark rate system. Since then, the working group has been discussing the strategy for activating KOFR and plans to implement the s
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Dec 09, 2024
- FSC Holds Market Monitoring Meeting (Dec. 9)
- Chairman Kim Byoung Hwan of the Financial Services Commission presided over a market monitoring meeting on December 9 with officials from the Financial Supervisory Service, five major financial holding companies, policy financial institutions, and related organizations and industry associations to check market situations and discuss response measures. The following is a summary of Chairman Kims opening remarks. A Summary of Chairmans Remarks At the Ministerial Meeting on Economic Affairs held yesterday, the government made an announcement that the economic team will spare no effort in ensuring a stable management of the economy despite looming uncertainties caused by recent political situations. In this regard, the FSC and the FSS will continue to do our parts and carry out our responsibilities in unwavering ways to ensure the maintenance of stability in our financial system and the external credibility in the financial sector. While continuing to maintain a real-time market monitoring system around the clock, authorities are prepared to promptly implement market stabilization measures when it becomes necessary, including a KRW10 trillion stock market stabilization fund, a KRW40 trillion bond market stabilization fund, the corporate bond and commercial paper (CP) purchase program, and the supply of foreign currency liquidity through the Korea Securities Finance Corporation. Meanwhile, authorities will seek to consistently pursue financial policy agendas according to the previously planned schedule. While ensuring a seamless implementation of the previously introduced measures, such as the Corporate Value-up Program, establishing a system designed to prevent illegal short sale activities, and granting a license to a new internet-only bank, authorities will keep pursuing the agendas that were slated for December, such as the measures to ease the financial burden of small merchants and self-employed business owners and the indemnity health insurance reform measures. To
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Dec 04, 2024
- FSC Holds Market Monitoring Meeting (Dec. 4)
- Chairman Kim Byoung Hwan of the Financial Services Commission convened a meeting on December 4 with officials from related authorities, financial institutions, and industry groups to check market situations and discuss response measures. The following is a summary of Chairman Kims opening remarks. A Summary of Chairmans Remarks Currently, the situation surrounding the foreign exchange market and overseas-listed stocks of Korean companies appear to be stabilizing. However, as there are concerns about a potential rise in volatility, financial authorities will utilize all available measures to prevent the spread of market anxiety and ensure a seamless and stable operation of financial markets in close coordination with policy financial institutions, related organizations, and industry groups. At the Emergency Meeting on Macroeconomic and Financial Issues (F4 Meeting) held earlier this morning, authorities decided to ensure the supply of unlimited liquidity support until the conditions return to normal in the financial markets. The measures include stock market stabilization fund in the amount of KRW10 trillion, bond market stabilization fund in the amount of KRW40 trillion, and the corporate bond and commercial paper (CP) purchase program all aimed ensuring market stability. At the same time, authorities will closely monitor financial companies foreign currency liquidity conditions to ensure their soundness, while supplying foreign currency liquidity through the Korea Securities Finance Corporation to prevent the risk of margin call emanating from a potential weakening of the Korean won. In responding to market situations, each organization is asked to strictly follow its own contingency plan. In this regard, policy financial institutions are asked to mobilize all available resources to ensure an active and flexible supply of funds to make sure that vulnerable groups, small merchants, and businesses face no challenges in meeting their financing needs. The stock market
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Nov 29, 2024
- FSC Holds Meeting and Discusses Plans for Operating Temporarily Eased Financial Regulations
- The Financial Services Commission held a meeting with related authorities and industry organizations on November 29 to discuss plans for operating temporarily eased regulations in financial sectors. At todays meeting, authorities discussed plans for the operation of the eased regulatory measures in the banking, financial investment, specialized credit finance, and savings banks sectors that are currently set to expire at the end of December this year. Given that an improvement in money market conditions is expected in the future and that all financial sectors liquidity ratios as of September 2024 stood above the normal regulatory levels, officials at todays meeting shared the same view on the need to gradually normalize the eased regulatory measures on financial companies liquidity requirements, which have been introduced at the time of market instability. In this regard, the banking sectors LCR (liquidity coverage ratio) requirement currently standing at 97.5 percent will be rolled back to 100 percent from January 1, 2025, and for financial investment businesses, the cap on the amount of bonds (issued by specialized credit finance businesses) that can be included when hedging risks associated with derivatives-linked securities (DLS) will also be downsized to 8 percent as scheduled from January 1, 2025. Meanwhile, the loan-to-deposit ratio of savings banks and the KRW-based currency liquidity ratio of specialized credit finance businesses will be gradually rolled back in stages. From January to June 2025, savings banks will be subject to a loan-to-deposit ratio of 105 percent (down 5 percentage points from 110 percent currently), and specialized credit finance businesses will be subject to a KRW-based currency liquidity ratio of 95 percent (up 5 percentage points from 90 percent currently) during the same period. In the second quarter of 2025, authorities will decide on whether to extend the period or completely roll back the eased regulatory measures after consider
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Nov 21, 2024
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Nov 13, 2024
- FSC Holds Meeting to Review Market Conditions and Extends Operation of Market Stabilization Programs
- Vice Chairman Kim Soyoung of the Financial Services Commission held a meeting on November 13 with related organizations and market experts to go over economic and financial market conditions at home and abroad in the wake of U.S. presidential elections and Feds monetary policy pivot and discuss policy responses to ensure market stability. Market Stabilization Programs At the meeting, Vice Chairman Kim said that it is necessary to maintain backstops in order to be prepared for the potential of rising uncertainty and volatility in the market. Therefore, Vice Chairman Kim said that the market stabilization programs currently in place will continue to be operated at the same level in 2025. In order to ensure stability in financial markets, Vice Chairman Kim said that it is necessary to take into account comprehensive factors, such as the political and economic uncertainties in major economies including the U.S., ongoing geopolitical risks in the Middle East, deepening global competition for Koreas strategic industries and the potential of downward adjustment in GDP growth, and the restructuring and resolution of problematic real estate development projects. As it is possible that financial markets may experience a temporary rise in volatility affected by various external factors, Vice Chairman Kim said that the government and related organizations will continue to stay alert and make consistent efforts to ensure market stability. To this end, the government and policy financial institutions (Korea Development Bank, Industrial Bank of Korea, and Korea Credit Guarantee Fund) plan to continue to make available liquidity support programs worth up to KRW37.6 trillion to ensure stability in the corporate bond and money markets in 2025, which include the following(a) bond market stabilization fund of up to KRW20 trillion, (b) corporate bond and commercial paper (CP) purchase program of up to KRW10 trillion, (c) primary collateralized bond obligation (P-CBO) support program of
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Nov 05, 2024
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Sep 26, 2024
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Sep 25, 2024
