Chairman Kim Byoung Hwan of the Financial Services Commission held a meeting to review business financing conditions and response strategies with officials from policy financial institutions and related businesses on December 19. The meeting was held to collect opinions from businesses and to preemptively respond to concerns about business financing conditions amid the continuation of foreign exchange market volatility and uncertainties at home and abroad. The following is a summary of Chairman Kim’s remarks.
A Summary of Chairman’s Remarks
Despite recent political situations, business financing market situations are largely showing signs of stability. However, there exist concerns about deteriorating conditions due to various factors at home and abroad. Therefore, it is necessary that authorities come together with policy financial institutions and commercial banks to discuss ways to alleviate concerns in the market.
To this end, first, the government will continue to carry out what needs to be done to address market anxiety. Authorities will postpone the introduction of stress capital buffers and improve the ways in which risk weights are calculated to help ease the banking sector’s burden of their soundness management and to facilitate an expansion of business financing activities. In addition, the government will closely work with the National Assembly to ensure prompt passage of economic legislations.
Authorities will also work to ensure the supply of policy financing support effectively. After taking into account opinions from related ministries, authorities will prepare plans for supplying policy funds for next year and provide adequate funding support to key strategic sectors. Authorities will also work to boost investment support for future growth sectors and businesses equipped with innovative technologies.
In preparing their business plans for next year, commercial banks are asked to pay particular attention to the stabilization of the real economy. In this regard, banks are recommended to consider more innovative ways of supplying funds and to make a transition away from the current model centered on household and real estate financing toward a business and growth oriented model of financing, and from the current debt-oriented model to an investment-driven one.
In order to facilitate business financing, it is crucial to have close cooperation between the government and the financial sector. To this end, various support programs will be newly implemented next year, including a low interest rate lending program for the semiconductor industry, a corporate bond issuance support program for middle market enterprises, and an expanded venture platform and policy financing support for regional enterprises.
Considering recent volatility in the FX market, banks are also asked to actively consider making adjustments to the FX payments transactions of businesses and the maturities of FX loans. This will help to ease demand for foreign currency toward the end of the year and contribute to the stabilization of the FX market.
* Please refer to the attached PDF for details.