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.
Dec 01, 2022
- Authorities Plan to Disclose Identity of Entities Committing Unfair Trading Practices
- As a way to bolster prevention of unfair trading practices in capital markets, the FSC plans to disclose the identity (corporate name, etc.) of those who violate capital market regulations such as restriction of short sales and prohibition of market disturbances and receive a disposition of a penalty surcharge or an administrative fine for that violation. This measure shall apply to the violators receiving sanctions at the 22nd regular meeting of the Securities and Futures Commission (SFC) scheduled to be held in December 2022. Their identities will be announced through the FSC website in February 2023. Background The FSC has gradually extended the scope and detailsstock items, dates and penaltiesof disclosure of the SFC resolutions on sanctions that are made available for unfair trading practices in capital markets. However, the identity of violators is not being disclosed currently due to the potential misuse of their corporate or individual financial transaction information by a third party. Nonetheless, there is a growing need to secure effectiveness of sanctions measures imposed on unfair trading activities in capital markets such as illegal short sales. Therefore, after a careful consideration, the FSC decided to expand the scope and details of disclosure of sanctions by unveiling the identity of violators. Disclosure of Identity of Entities Violating Capital Market Regulations If an investigation led by financial authorities ends up with sanctionsof imposing a penalty surcharge or an administrative fine, the identity (corporate name, etc.) of the violator will be unveiled. Although the violators that become subject to sanctions are mostly corporate entities, in some cases, individuals also become subject to sanctions when they commit unfair trading practices such as activities of disturbing market order. If unfair trading activities in capital markets under the investigation led by financial authorities are subject to criminal punishment,in consideration of t
Nov 16, 2022
- KoFIU Holds Talks with CEOs of VASPs and Discusses Market Situation
- The KoFIU held a meeting with CEOs of five major virtual asset service providers (VASPs)in Korea on November 16 and discussed their current anti-money laundering (AML) procedures and controls on overseas withdrawal and remittance of virtual assets, and their custody and management of customer assets. With regard to the AML procedures and controls of domestic VASPs, the heads of VASPs said that the level of transparency in virtual asset transfer increased after the travel rule took effect from March 25 this year, and that they run the whitelistingand blacklistingsystems, which block transactions with high-risk traders. In particular, they said that VASPs are regularly monitoring and blocking wallet addresses that are used in crypto mixers, which split and blend virtual assets of many users together to obfuscate the origins and traces of the funds. In this regard, KoFIU authorities said that it is important to prevent money laundering taking place when users virtual assets are transferred to high-risk countries or traders via personal wallets and the likes. For this, authorities asked VASPs to establish a standard for detecting suspicious transactions and enhance screening and checking the origin of the users funds and the purpose of his or her transactions. Regarding the condition of domestic VASPs custody services for customer assets, authorities emphasized the importance of user protection efforts made by VASPs. Authorities indicated the need to set up a real-time information system on customers assets in custody and asked VASPs to closely monitor the safety of their transaction support for the self-issued virtual assets. In the wake of the recent FTX crash, authorities said that they will support the ongoing legislative efforts at the National Assembly to ensure that relevant user protection measures are discussed. The heads of VASPs said that the root of the FTX collapse was the inappropriate use of customer assets by the company management and the misuse of self
Nov 11, 2022
- FSC Announces Additional Measures to Stabilize Project Finance ABCP and CP Markets
- FSC Vice Chairman Kim So-young presided over a meeting on November 11 with officials from the FSS, the Bank of Korea, financial industry groups and policy financial institutions to review current market situation. At the meeting, authorities discussed recent trends in financial markets, progress of the governments market stabilization measures announced earlier on October 23 and additional measures to help stabilize the CP (commercial paper) market. At the meeting, participants assessed that since the governments market stabilization programs were first announced on October 23, concerns about a severe credit crunch in bond and money markets have eased somewhat. However, relative to the corporate bond market, there are continuing challenges in short-term money market. Financial investment businesses said that thanks to clear regulatory interpretation offered by financial authorities last week to allow securities firms to purchase ABCPs (asset-backed commercial papers) guaranteed by their own companies, there is less burden of having an oversupply of ABCPs guaranteed by securities firms in the market. However, they indicated that refinancing of ABCPs (especially A2 grade) guaranteed by small- and medium-sized securities firms continues to be difficult, which has led to liquidity problems of securities firms and high levels of their CP spreads. Moreover, authorities reviewed the progress of both the public and private sector efforts to stabilize the bond markets supply and demand situation. The government has reduced the volume of government bond issuance this year. The Ministry of the Interior and Safety and local governments plan to pay back debt on municipal bonds and public corporation bonds scheduled to mature before early 2023 and preemptively prepare for portions of guaranteed debt expected to turn into determinate liabilities (total KRW3.4 trillion) through budgeting. In addition, the government is closely working with public institutions to spread out issue da
Nov 09, 2022
- FSC Chairman Meets with Heads of Banks and Discusses Market Stabilization Measures
- FSC Chairman Kim Joo-hyun met with the heads of Korea Federation of Banks and twenty major banks on November 9 and held talks on financial market stabilization efforts. At the meeting, participants shared their outlook and views on financial market conditions and discussed (a) the banking sectors constructive role and action plan for market stabilization and (b) current difficulties in banks financing and operation of funds as well as ways to resolve them. Summary of Remarks by FSC Chairman Rapid increases in interest rates are continuing to put stress on our economic situation. However, unlike in the previous crisis situations such as thefinancial crisis in 2008 and the COVID-19 pandemic in 2020, it is now difficult to handle this situation by lowering interest rates or expanding fiscal spending. Now is the time for the financial industry and the government to come together and respond to difficulties by effectively making use of all available capacities in our economy. Under these circumstances, the banking sector has thus far provided a steady reinforcement to support vulnerable groups and supply liquidity in response to the recent turmoil in money market and bond market. The five major financial holding companies are making efforts to stabilize markets through their support plan announced on November 1. To sustain stability in financial markets, it is necessary to look closely at both the trees and the forest as stated earlier by former Fed chair Ben Bernanke. In this regard, the banking sector, as the core of our financial system, should provide a leading role to stabilize market for the whole financial system over the banking sector. First, aside from abrupt rate hikes, there are concerns about credit crunch that may result from the collapse of market confidence. In this regard, the combined effects of the governments market stabilization measures and the banking sectors efforts to stimulate the flow of funds will significantly help businesses and micro-enterp
Nov 04, 2022
- Financial Authorities Hold Meeting to Monitor Market Situation in Wake of U.S. Fed Rate Hike
- The FSC held a meeting with the Financial Supervisory Service, financial industry groups and policy financial institutions on November 4 to review financial market condition following the recent increase in the U.S. federal funds rate (+75bps). On November 2, the Fed raised its policy interest rate by 75 basis points for the fourth consecutive time. The Fed Chair Jerome Powell mentioned about a possible slowdown in the pace of future increases but suggested that the Fed will go on to raise rates and that the ultimate interest rate will be higher than previously expected. At todays meeting, authorities reviewed financial market conditions with a focus on the impact of the FOMC decision on domestic money market including the corporate bond and CP (commercial paper) markets. Authorities also checked the progress and future plans for the KRW50 trillion-plus liquidity support measures. a) Bond market stabilization fund: Purchase of CPs began last week; purchase of bonds issued by specialized credit finance companies began this week; and first round of additional capital calls expected to be completed this week (Oct. 20). b) Korea Securities Finance Corporation: About KRW1 trillion in repos (repurchase agreements) and loans provided to small- and medium-sized securities firms so far; purchase of CPs issued by securities firms began on November 1 (Oct. 26). c) Five major financial holding companies: Announced that KRW95 trillion in liquidity supply will be implemented (Nov. 1). d) Banks: Industry-wide market stabilization efforts in place such as reducing bank bond issuance and expanding market liquidity support; temporary easing of LCR (liquidity coverage ratio) requirement (Oct. 21) and loan-to-deposit ratio (Oct. 27) announced; and a working-level taskforce to regularly monitor situation of banking sector launched on Nov. 3. e) Insurance sector: Measures to support liquidity conditions of non-life insurers (Oct. 28) and life insurers (Nov. 3) are being taken. f) Financi
Nov 04, 2022
- Authorities Hold Meeting to Review Financing Situation of Specialized Credit Finance Businesses
- The FSC and the FSS held a meeting with the Credit Finance Association of Korea and specialized credit finance business companies (credit card firms and capital companies) on November 4 to review financial market situation. At the meeting, financial authorities checked the borrowing condition (bonds and CPs) of specialized credit finance business companies and listened to their opinions. Financial authorities have been keeping close tabs on the financing condition of specialized credit finance businesses and have already taken a necessary step to facilitate their bond financing by allowing the bond market stabilization fund to buy financial bonds issued by several specialized credit finance businesses from November 3. In the mean time, the ongoing regulatory plan to reduce the maximum ratio of financial bonds issued by specialized credit finance business companies, which are incorporated into the portfolio of derivatives-linked securities (ELS, DLS, etc.) issued by securities firms to hedge risk, will be applied flexibly. According to the previous plan, the maximum ratio would have been 12 percent until the end of 2022 and lowered to 8 percent from the beginning of 2023. However, that plan is postponed for three months, which will allow those ELS or DLS to incorporate up to 12 percent of financial bonds issued by specialized credit finance business companies for the purpose of risk hedging until the end of March 2023. At the meeting, financial authorities encouraged specialized credit finance business companies to make persistent efforts to support the stabilization of financial markets by effectively managing their own liquidity condition and the soundness of their assets. Authorities emphasized that financial authorities and the industry should make joint efforts and communicate regularly to stabilize markets. Financial authorities will continue to closely monitor changes in financial markets and promptly carry out necessary measures to stabilize markets. * Please
Nov 03, 2022
- Authorities Hold Meeting with Life Insurance Businesses to Monitor Market Situation
- The FSC and the FSS held a meeting with life insurers on November 3 to share current issues in the insurance sector and monitor current market situation. At the meeting, participants discussed the recent situation where insurance companies are having to resort to bond sales due to an abrupt increase in demand for liquid assets following a rise in the number of surrendered savings insurance policies driven by increasing interest rates on savings products amid growing market uncertainties. In this regard, the insurance sector expressed the need for measures that will help them accumulate more liquid assets or alleviate their burden of having to maintain certain levels of liquid assets. In response, financial authorities stated that the insurance companies rising demand for liquid assets is understandable. However, to ensure stability in money market, authorities asked insurers to refrain from selling bonds and more actively contribute to market stabilization efforts as institutional investors. Nonetheless, authorities decided to seek measures to help insurers to better respond to the recently expanded volatility and uncertainty of funding market. To this end, authorities will temporarily ease the liquidity risk evaluation standardfor insurers to facilitate their active contribution to market stabilization efforts such as capital calls for the bond market stabilization fund. In addition, at a meeting with non-life insurers on October 28, authorities already decided to expand the types of liquid assets for insurers when applying the liquidity ratio regulationto ease their burden of maintaining liquid assets. Also, for other measures to increase liquiditysuggested by insurers, authorities will promptly review their viability while maintaining close communication throughout. The measure to temporarily relax the liquidity risk evaluation standard for insurers will take effect promptly with a revision to the detailed regulations on supervision of insurance businesses in Nov
Nov 01, 2022
- FSC Chairman Meets with Financial Holding Company CEOs and Discusses Market Stabilization Measures
- FSC Chairman Kim Joo-hyun met with CEOs of five major financial holding companieson November 1 and held talks on current financial market situation. At the meeting, Chairman Kim and participants discussed the important role of financial holding companies in stabilizing markets, ensuring liquidity provision to the real economy and providing support for vulnerable debtors. Summary of Remarks by FSC Chairman Amid global monetary policy tightening, Koreas money market reacted sensitively to certain market shocks, which has resulted in the spread of anxieties even to the corporate bond market. However, the governments swift announcement and implementation of market stabilization programs worth KRW50 trillion-plus, in conjunction with the Bank of Korea and the banking sectors speedy efforts, helped to stop market situations from getting worse and that market conditions are gradually returning to stability. To ensure effectiveness in the governments market stabilization measures, it is necessary to have market participants play their parts and cooperate with each other to facilitate seamless circulation of funds. In particular, the role and responsibility of financial holding companies and their affiliated financial institutions like banks are important as they make up a big part of financial markets and have good financial and liquidity conditions. Financial holding companies and their affiliated banks recent earnings temporarily increased mostly as the amount of loans increased amid expansive fiscal and monetary policies put in place to deal with the COVID-19 pandemic and as global monetary policy tightening followed. Thus, it is expected that financial holding companies and their affiliated banks will play a role in enabling smooth flow of funds through financial markets by acting as intermediaries to stabilize markets, ensure provision of liquidity to the real economy and assist vulnerable debtors. In this regard, financial holding company CEOs are encouraged to make e
Oct 28, 2022
- Authorities to Temporarily Ease Regulation on Bond Issuance Procedure for Banks
- The FSC and the FSS will temporarily ease a rule on the bond issuance procedure from October 28 to help banks more flexibly correct their already filed total amount of bonds to be issued. Pursuant to the Financial Investment Services and Capital Markets Act (FSCMA), banks are issuing their bonds after filing advance registration statements with the FSC that include total amount of bonds to be issued for certain periods in the future (from two months to two years each, under the universal shelf registration statement system).Under the FSCMA, when a bank wants to correct the total amount of bonds to be issued written on an already filed registration statement, the amount can only be reduced up to 2+0 percent from the predetermined amount. This rule restricts banks from making reduction to the predetermined issue amount of bonds on their registration statement by more than 20 percent when they need to take steps in reaction to market uncertainty or take measures to help stabilize the bond market. Responding to this, authorities will not impose penalties on banks that fail to issue bonds according to their previously submitted registration statements. The penalty exemption will apply to bank bonds already determined to be issued until December 31, 2022 on the statements. Authorities will consider the need for extending the period of penalty exemption in the future after taking into account market situations. This exemption will relieve banks from a duty to issue bonds just to comply with their previously submitted registration statements and thereby alleviate potential worries in the bond market that bank bond issuance may drive out the demand for corporate bonds. With the issuance of a no-action letter, this penalty exemption will take effect immediately on October 28. * Please refer to the attached PDF for details.
Oct 28, 2022
- Authorities Hold Meeting to Review Credit Supply to Lower Income Groups by Credit Businesses
- The FSC and the FSS held a monitoring meeting with the Consumer Loan Finance Association on October 28 to check the situation of credit business sector with a focus on lower income groups. Financial authorities reviewed the current status of credit supply to lower income groups by credit businesses, checked borrowing conditions of credit businesses and listened to opinions raised by the Consumer Loan Finance Association. At the meeting, financial authorities and the association shared a common recognition that if credit supplies from credit businesses shrink significantly under the current economic conditions, lower income groups will face more difficulties. In this regard, financial authorities demonstrated a desire to actively communicate with the credit business sector. Authorities also encouraged credit businesses to fulfill their role and duty as a pillar of lower income finance by ensuring credit supply for lower income groups. * Please refer to the attached PDF for details.
Oct 28, 2022
- Authorities Hold Meeting to Review Asset Management Conditions of Insurance Sector
- The FSC and the FSS had a meeting with non-life insurance companies hosted by the Korea Insurance Research Institute on October 28 to share recent issues in the insurance sector and check current market situations. Authorities reviewed the liquidity condition of insurers and their management over payment capacity amid recently increased uncertainty in financial markets. Authorities and participants discussed the role of insurers as major institutional investors to help stabilize the current market situation. At the meeting, financial authorities decided to pursue measures in response to recently increased volatility and uncertainty in money market. In this regard, authorities will allow more asset types to be recognized as liquid assets when applying the liquidity ratio regulation. Accordingly, the definition of liquid assets, which referred to assets with maturity of three months or less before, will be broadened to include instantly cashable assets such as debt securities with maturities of three months or more which are tradable in tight markets. In addition, despite current difficulties in their asset management conditions, financial authorities encouraged insurers to more actively contribute to market stabilization efforts as institutional investors, since their soundness indicators are expected to improve with the introduction of a new capital adequacy framework (K-ICS or Korean Insurance Capital Standard)next year. On November 3, authorities plan to hold a market monitoring meeting with life insurers. Authorities will continue to keep up with changes in financial markets carefully and carry out market stabilization measures promptly when needed. * Please refer to the attached PDF for details.
Oct 27, 2022
- FSC to Bolster Financial Support Programs to Actively Assist Revitalization of Economy
- The 11th emergency meeting to stabilize peoples livelihoods was held on October 27 chaired by President Yoon Suk Yeol. At this meeting, relevant ministers and vice ministers discussed the governments programs to revitalize the economy. The FSC announced plans to bolster various financial support measures. The plans aim to (a) ease regulations in housing finance to sustain the soundness of the construction sector, (b) provide liquidity to stabilize operating conditions of SMEs and (c) relieve interest rate burden for households. Key Details of Financial Support Measures Announced a) (Easing Regulations in Housing Finance) Authorities will ease excessive LTV (loan-to-value) regulations by raising LTV ratio ceiling in regulated areas for no-home or one-home owners from 20-50 percent to 50 percent and allowing no-home or one-home owners to be eligible for home mortgage loans on apartments worth more than KRW1.5 billion. b) (Supporting Liquidity Provision for SMEs) Authorities will prepare KRW50 trillion worth of financial support package to alleviate interest rate burden on SMEs and startups and to provide sufficient financing for their future growth. c) (Reducing Interest Burden for Households) Authorities will relax the eligibility requirement for Relief Conversion Loan and encourage banks to voluntarily expand the scope of debtors eligible for their own debt adjustment programs. One-home owners whose house price is KRW600 million or less and annual income is KRW100 million or less can apply for Relief Conversion Loan from November 7. Maximum loan amount available will be increased from KRW250 million to KRW360 million. For banks debt adjustment programs, banks have offered these programs only to mortgage holders who lost jobs, closed businesses or got sick. Now, banks will additionally make mortgage holders undergoing difficulties in making paymentswhich became burdensome amid interest rate hikeseligible for these programs. * Please refer to the attached PDF for deta
Oct 27, 2022
- Regulation on Loan-to-Deposit Ratio to be Temporarily Eased to Facilitate Corporate Financing
- The FSC announced that financial authorities will temporarily ease the regulation on loan-to-deposit ratio, which will enable banks and savings banks to provide sufficient liquidity to businesses. The demand for business loans increased as a result of the recent contraction of the corporate bond market.However, the current regulation on loan-to-deposit ratiohas prevented banks from responding actively to these demands for borrowing. To facilitate active response, loan-to-deposit ratio is chosen as a first step of temporary regulatory easing because it is only domestically regulated and swiftly adjustable. Authorities will continue to monitor financial market situations and consider whether other deregulatory steps on such indexes like LCR (liquidity coverage ratio), NSFR (net stable funding ratio) should be taken. Details of Temporary Regulatory Easing To help banks and savings banks to more effectively respond to corporate loan requests, the loan-to-deposit ratio requirements will be eased from 100 percent for both to 105 percent for banks and 110 percent for savings banks. The eased loan-to-deposit ratio requirements will be applied for upcoming six months first, and authorities will take into account extending the period after reviewing market situation. With this easing of loan-to-deposit ratio requirements, banks and savings banks will have additional capacity to lend more to businesses. Furthermore, competition for deposit-taking is alleviated, and thus reduced borrowing costs will help in part to contain upward pressure on interest rates of corporate loans. Further Plan Financial authorities will issue a no-action letter in October to allow temporary easing of loan-to-deposit ratio rules immediately. Changing the calculation method will also take effect immediately with a no-action letter in October, but authorities will revise the supervisory regulation on banking business afterward to make the change officially. Authorities will maintain close communication
Oct 26, 2022
- Authorities Hold Market Monitoring Meeting to Check Market Stabilization Efforts of Banks
- The FSC and the FSS had a meeting with five major banks on October 26 to check the progress of the banking sectors efforts to stabilize current financial market situation after last weeks decision to postpone gradual normalization of banks LCR (liquidity coverage ratio) requirement by six months. At the meeting, officials from the banking sector said that banks now have more capacity for lendingwith the help of the postponement in gradual normalization of their LCR requirementand pledged to strengthen efforts to stabilize markets. In particular, banks said that they will purchase CPs (commercial papers), ABCPs (asset-backed commercial papers) and electronic short-term bonds to stabilize money market and bond market. Meanwhile, banks showed their commitment to quickly respond to capital calls from the bond market stabilization fund and minimize issuance of bank bonds. In addition, banks expressed their willingness to maintain financing support for the corporate sector through the purchase of special bank bonds including bonds issued by the Korea Development Bank (KDB), the supply of corporate loans and the extension of credit line. Financial authorities encouraged the banking sector to prop up and stabilize financial markets. Authorities also promised to step up communication with banks and keep close tabs on financial market situations. * Please refer to the attached PDF for details.
Oct 26, 2022
- Liquidity Support Programs Made Available for Securities Firms
- The FSC held a meeting with securities firms on October 26 to explain the implementation plan of market stabilization measures, which was announced at the government-wide emergency meeting on macroeconomic and financial stability held on October 23. The meeting also checked the liquidity conditions of securities firms and money market. Authorities announced that liquidity support programs will be available for securities firms as part of the market stabilization measures announced at the earlier emergency meeting. The Korea Securities Finance Corporation (KSFC) begins providing KRW3 trillion-plus of liquidity support for securities firms from today. The Korea Development Bank (KDB) will begin to purchase KRW2 trillion-plus worth of CPs (commercial papers) issued by securities firms from October 27. With these programs in place, authorities expect that securities firms undergoing temporary liquidity shortages will be able to secure liquidity, depending on their situations. Key Details of Liquidity Support Programs a) Korea Securities Finance Corporation The Korea Securities Finance Corporation (KSFC) begins to provide KRW3 trillion of liquidity support for small and medium-sized securities firms through repurchase agreements (repos) and stock-secured loans from October 26. In particular, since the coverage of collateralizable securities for repos and loans is further expanded, securities firms will be able to make better use of this liquidity support program. b) Korea Development Bank The Korea Development Bank (KDB) begins to operate the corporate bond and CP purchase program worth KRW10 trillion. The KDB injects KRW2 trillion first to purchase CPs issued by securities firms from October 27. However, as this program exceptionally purchases financial companies CPs only during this time, the liquidity support will be provided to them with a condition of restructuring efforts. c) Efforts Aimed for Normalization of Money Markets by Securities Industry Along with the ope
Oct 24, 2022
- Financial Authorities Hold Meeting to Respond to Bond and Money Market Situation
- FSC Chairman Kim Joo-hyun presided over a meeting of senior FSC officials on October 23 right after the government-wide emergency meeting on macroeconomic and financial stability took place. At this meeting, Chairman Kim ordered authorities to promptly take follow-up actions to implement the support measures announced at the earlier emergency meeting. After the senior official meeting, FSC Standing Commissioner Kwon Dae-young held another meeting with the Financial Supervisory Service (FSS), financial industry groups, policy financial institutions and commercial financial institutions to check the recent situation of bond and money market and related risk factors in financial institutions. At the meeting, financial authorities explained that they will immediately activate the KRW50 trillion-plus liquidity of supportive measures announced at the government-wide emergency meeting. Authorities emphasized that the government, aiming to ensure market stability, will provide ample support by all means necessary. In addition, as restoration of market mechanisms is the key to overcome the current problematic situation, authorities said, market participants such as financial institutions and institutional investors also should step up their own efforts to facilitate recovery of the role of financial markets as intermediaries and accordingly to ensure a virtuous cycle. Moreover, authorities underscored the need for concerted efforts of both the government and the private sector. Application of all available means at their disposal and close communication between them should be in harmony to ensure market stability as the government alone has limited financial resources. Financial industry groups, in response to authorities request, also showed their commitment to strengthen efforts to stabilize financial markets and actively cooperate with the governments measures. * Please refer to the attached PDF for details.
Oct 21, 2022
- FSC Decides 6-Month Postponement in Rolling Back Regulatory LCR for Banks
- The FSC held a meeting with the Financial Supervisory Service (FSS) and five major bankson October 20 to review financial market situation with a focus on the banking sectors capital raising and management and the atmosphere of financial markets including money market. At the meeting, financial authorities and participants from five major banks shared the recent view that volatility and uncertainty have expanded in money market. In order to actively respond to this situation, financial authorities decided to slow down the pace to reverse eased regulations during the pandemic. Following this, the date of regulatory rollback on banks LCR (liquidity coverage ratio) requirement will be postponed for six months. Moreover, financial authorities encouraged banks to step up efforts in helping to stabilize the corporate bond and CP (commercial paper) markets. * Under the current regulatory rollback plan, banks are allowed to maintain regulatory LCR of 92.5% until the end of December 2022. But a six-month postponement would allow them to maintain LCR requirement of 92.5% until the end of June 2023. Financial authorities will strengthen monitoring of financial markets in the future and seek timely implementation of necessary measures. * Please refer to the attached PDF for details.
Oct 20, 2022
- FSC Chairman Orders Short-term Money Market Stabilization Measures
- Financial authorities observe money market with careful attention to the recent increase in its volatility. In particular, authorities are closely watching instigating factors that contribute to market anxieties in the aftermath of the PF-ABCPincident in Gangwon-do, where the provincial government promised debt guarantee. In this regard, aiming to prevent those anxieties from spreading across financial markets, FSC Chairman Kim Joo-hyun urged authorities to strengthen market response efforts in need. To this end, authorities will make the bond market stabilization fund restart the purchase of corporate bonds and CPs (commercial papers) with KRW1.6 trillion of residual amount in it and prepare for making additional capital calls immediately. Authorities are also monitoring securities firms and specialized credit finance companies with a focus on their liquidity availability, and plan to actively provide liquidity support through the Korea Securities Finance Corporation. In addition, authorities would ease some liquidity requirement for financial institutions in such a way to postpone the normalization of banks regulatory LCR (liquidity coverage ratio). Along this line, if needed, authorities will promptly prepare and announce a financial support program to avoid the spread of fear related to the real estate development project financing market. * Please refer to the attached PDF for details.
Oct 12, 2022
- FSC and FSS Hold Joint Market Monitoring Meeting
- The FSC held a market monitoring meeting jointly with the Financial Supervisory Service (FSS) on October 12, reviewed the impact of the Bank of Koreas recent interest rate hike (+50 bp) on financial markets and financial institutions, and discussed response strategies to mitigate risk. To ease volatility in stock markets, financial authorities agreed to ensure a timely reactivation of the stock market stabilization fund by promptly carrying out additional purchase agreements with institutional investors. While continuously watching market situations, authorities will spare no effort to prepare for a timely implementation of additional market stabilization measures in need. In addition, authorities shared the same view that institutional investors need to play a responsible role based on a mid- and long-term perspective to prevent the spread of anxiety in financial markets. Authorities also promised to make efforts to alleviate corporate financial difficulties amid interest rate hikes and to prevent an abrupt one-side movement of market interest rates. To this end, authorities plan to carry out the following. a) Strengthen support for businesses with low credit by expanding the corporate bond and CP (commercial paper) purchase capacity of policy financial institutions from current KRW6 trillion to KRW8 trillion. b) Actively respond to the recent vulnerabilities in bond markets such as real estate project financing and ABCP (asset-backed commercial paper) and bolster efforts to prevent liquidity crunch of healthy businesses. c) Take necessary steps depending on market situations to activate a backstop to reduce volatility in market interest rates. For example, restart purchase of corporate bonds and commercial papers with KRW1.6 trillion residual amount of the bond market stabilization fund. d) Actively prepare a liquidity injection mechanism to stabilize financial markets in close coordination with relevant institutions. Authorities also committed to reduce burdens o
Oct 05, 2022
- New Start Fund Launched on October 4 to Support Rebound of Micro-enterprises and Self-employed
- The FSC announced that New Start Fund, a bespoke debt adjustment program to help pandemic-hit micro-enterprises and self-employed business owners was launched on October 4. At the launching event, 19 financial industry groups and financial institutions signed a memorandum of understanding (MOU) for New Start Fund. From October 4, application for New Start Fund became available at 76 on-site nationwide locations and New Start Fund website. The MOU has been prepared after a series of consultation and communication between New Start Fund, Credit Counseling and Recovery Service (CCRS) and financial industry groups and institutions. It contains details about New Start Fund like eligibility, details of support, method of debt adjustment and its process, debt purchasing price, etc. Each financial industry group participating in the MOU signing event is currently at the final stage of collecting agreements from about 3,730 financial institutions expected to sign up for the partnership. FSC Chairman Kim Joo-hyun attended the New Start Fund launching event and thanked everyone who has contributed to the preparation. While stating that New Start Fund will help support the recovery of micro-enterprises and the self-employed and prevent social, economic and financial anxieties about insolvency risks, Chairman Kim urged authorities to ensure seamless operation of this new debt adjustment program. The pandemic-hit self-employed and micro-enterprises wishing to apply for debt adjustment can apply for New Start Fund by visiting one of the 76 on-site locationsfrom 9:00 am, October 4. Application is also available through an online platform. * Please refer to the attached PDF for details.