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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Jun 09, 2021
- KoFIU and Probing Institutions to Strengthen Monitoring and Inspection on AML Duties of VASPs
- The Korea Financial Intelligence Unit held a meeting with eleven institutions tasked with probing virtual asset service providers for their AML requirements on June 9.At the meeting, the KoFIU and relevant institutions discussed ways to bolster inspection of VASPs use of fake and false name bank accounts and to strengthen AML supervision over financial institutions. (Strengthen Monitoring of Fraudulent Bank Accounts) As VASPs are required to register with real name bank accounts by September 24 this year, their use of fictitious bank accounts has become more prevalent. As local banks have begun to more tightly restrict VASPs from opening up new accounts for collection of money, the use of accounts opened at mutual finance firms and other small-scale financial firms has also increased. As such, the authorities will strengthen monitoring of fraudulent and inappropriate use of bank accounts by VASPs. Financial transactions through fraudulent and fictitious bank accounts will result in rejection of transactions and termination of accounts. In this regard, the authorities will also strengthen monitoring of suspicious account activities. (Conduct Comprehensive Inspections on Fraudulent Accounts) The relevant institutions will carry out comprehensive inspections on the fraudulent accounts operated by VASPs between June and September. In the future, the status on the use of fraudulent accounts by VASPs will be analyzed monthly and shared with relevant institutions. (Enhance Monitoring of VASPs) As the deadline is approaching for VASPs to register their business with the authority, there exists a greater risk of business closure. As such, the authorities will enhance monitoring of VASPs operating accounts as well as accounts used for collecting deposits. (Strengthen AML Supervision) The authorities will strengthen AML supervision and inspection over financial institutions in order to prevent fraudulent activities, such as inappropriate lending, embezzlement of funds, illicit
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Jun 03, 2021
- FSC Announces Analysis on Stock Markets with Partial Resumption of Short Selling
- With the partial resumption of short selling being in place for about a month, the FSC announced an analysis on stock market trends for the period of May 3 to June 2. During this period, stock prices moved in a similar pattern as global stock markets while domestic stock prices showed relatively stable movements compared to other markets. Although the average daily amount of short selling transactions rose somewhat, it appears that there exists no significant relationship between short selling and stock prices for the given period. The FSC and other relevant institutions will continue to closely monitor market trends while working to bring about transparency and fairness in the markets. Stock Market Trends As of June 2, KOSPI and KOSDAQs closing prices were up 2.4 percent and down 0.2 percent, respectively, compared to April 30, the last trading day before the partial resumption of short selling began. In May, global stock prices showed mixed trends with the possibility of tapering by the Fed amid price increases in the U.S. Asian stock markets moved in the same direction as global stocks while domestic stock markets showed relatively stable trends as corporate earnings improved and retail investors remained net buyers. In May, foreigners net sold KRW9 trillion but turned to net buying in the last week of the month. Due to concerns about a monetary tightening from the U.S., other Asian markets also experienced foreign outflows. Short Selling Trends During the one-month period from May 3 to June 2, the average daily amount of short selling transactions increased somewhat to KRW688.2 billion. However, considering the fact that the total transaction amount increased more than twice the level seen before the partial resumption of short selling began, the growth is not that considerable.Also, as the built-up demand for short selling begins to fade out, the growth in the amount of short selling transactions also shows a downward trend toward stability. During the one-mont
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Jun 02, 2021
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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 28, 2021
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May 27, 2021
- FSC to Host Special Session on Green Finance at the 2021 P4G Seoul Summit
- The FSC will host a green future session on the topic of green finance at the 2021 P4G Seoul Summit at Dongdaemun Design Plaza on Saturday, May 29, from 20:00 to 22:00 (Korean Standard Time). The special session on green finance will be available for online live streaming for anyone who is interested in watching via official websites of the 2021 P4G Seoul Summit, FSC and their YouTube channels. The special session will feature discussions on the role of finance in fostering green recovery in the post-COVID-19 era. Speakers and panelists will include foreign dignitaries and experts from climate and finance-related international organizations and institutions, such as the UNFCCC, WEF, IFC, BIS, EIB, TCFD, GCF, GGGI and SP. FSC Chairman Eun Sung-soo will deliver opening remarks through which he will offer an outlook on the future tasks of global green finance efforts while calling for close cooperation from financial sectors across the globe to achieve carbon neutrality. In particular, Chairman Eun will introduce Koreas green finance policies that have been actively pursued by the government as it announced the 2050 carbon net zero goal last year. The special session on green finance will shed a new light on the important role of finance in responding to climate change. It will also help raise domestic financial sectors interest and participation in green finance efforts. For more details about the program, please see the attached reference material. * Please refer to the attached PDF for details.
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May 25, 2021
- Government to Work on Improving Financial Consumer Education
- Vice Chairman Doh Kyu-sang presided over the 1st consultative body meeting on financial education virtually held on May 25. The consultative body, which had been operated on a voluntary basis from 2007 to 2020, turned into a statutory organization with the enactment of the Financial Consumer Protection Act taking effect from March 25, 2021. At its first meeting, chaired by FSC Vice Chairman, the consultative body discussed and approved basic principles for improving financial consumer education and detailed plans. Key Discussions (Operation of the Consultative Body) Under the Act, the consultative body is composed of government officials from eight relevant ministries and deputy governor of the FSS. However, it will be attended by private sector experts from consumer groups, research and education institutions. The consultative body will hold its regular meeting bi-annually in June and December. It may hold irregular meetings, if needed. (Financial Education Plan for 2021) The government will strengthen online education infrastructure and programs to ensure the uninterrupted financial education under the Covid-19 circumstances. Relevant institutions will work together to develop effective and creative materials to boost public awareness of the Financial Consumer Protection Act. (Role Assignment among Financial Education Institutions) Financial consumers are categorized into groups according to their lifecycle and specific circumstances, For each group, a responsible education institution will be assigned. Responsible institutions will be asked to submit evaluation reports and plans on financial education for each group to the consultative body in December every year. (Certificate for Educational Content) Financial education institutions will jointly review education content on the basis of its appropriateness, accuracy, delivery and fairness. Qualified content will be granted a certificate, which is subject to reassessment every one or three years. (Certificate for
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May 24, 2021
- Financial Authorities and Relevant Institutions Declare Support for TCFD and Its Recommendations
- The FSC along with thirteen other relevant institutions announced their official declaration of support for the Task Force on Climate-related Financial Disclosure and its recommendations on May 24. The declaration was followed by the green finance consultative bodys kick-off meeting chaired by Vice Chairman Doh Kyu-sang. Vice Chairmans Remarks Last year, the average temperature in Europe and Asia reached a record high in 111 years according to the Global Climate Report 2020 by the U.S. National Oceanic and Atmospheric Administration. Considering ripple effects of climate change on the stability of financial systems, the financial sector should preemptively take a responsible role in global issues such as the climate change. Recently, the EU has introduced green taxonomy which provides standards on support for green industries. The Biden administration in the U.S. has strengthened its climate leadership by rejoining the Paris Agreement and holding a Leaders Summit on Climate. The Korean government, too, declared the 2050 carbon net zero goals and enhanced its carbon reduction objectives while suspending state-backed financial institutions financing of overseas coal plants. With the K-New Deal initiative, the government has been expanding investments in green sectors as well. (Support for TCFD and its significance) The financial authorities plan to boost cooperation with the international society to more actively respond to climate change. Last week, the FSC and FSS applied for membership to the Network of Central Banks and Supervisors for Greening the Financial System. Today, the FSC and thirteen relevant institutions are here to announce official declaration support for the TCFD. The TCFD is a global consultative body created to promote climate-related financial disclosures. In 2017, the TCFD introduced its recommendations and more than 2,000 institutions from 78 countries across the globe have shown support for the TCFD and its recommendations. In Korea, a total of
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May 21, 2021
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May 20, 2021
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May 11, 2021
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May 10, 2021
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May 10, 2021
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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 06, 2021
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May 03, 2021
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May 03, 2021
- Authorities Introduce Measures to Strengthen Oversight on Quasi-investment Advisory Businesses
- The financial authorities held the 3rd taskforce meeting on the prevention of unlawful and unfair trading activities in stock markets on April 30 and reviewed progress in the implementation of various measures. At the meeting, the authorities introduced and decided on the measures to strengthen management and supervision on the quasi-investment advisory businesses. The measures are aimed at (a) preventing quasi-investment advisory businesses from engaging in unauthorized business activities, (b) strengthening management from the time of their business registration to operation and exit and (c) bolstering detection of illegal activities using social media chatrooms, etc. Background A quasi-investment advisory business provides investment advisory services to an unspecified number of individuals. There are no particular entry requirements for these businesses as they are only required to register with the authority.With the goal of preventing damages to investors, the government has been working on regulatory improvements. Since September last year, the FSS has conducted inspections on 351 entities and detected a total of 54 cases where illegal activities are suspected. As the sales practice of quasi-investment advisory businesses has shifted to online spaces such as social media chatrooms and Youtube, the number of investor complaints being filed has also increased.Based on false or exaggerated promises of investment returns, investors are lured into paying high fees, inflicting financial damages to investors. As such, the financial authorities along with private sector experts have set up a taskforce and prepared the following measures to strengthen oversight on quasi-investment advisory businesses. Key Measures I. Root out unauthorized business activities - Strengthen public awareness on unlawful activities: The authorities will strengthen efforts to better inform investors about the typical types of illegal activities, including stock advisory social media chatroo
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Apr 29, 2021
- Government Announces Household Debt Management Plan for 2021-2023
- The government announced the household debt management plan for 2021-2023 on April 29. The plan is aimed at (i) managing the growth rate of gross household debt at stable levels for the mid- to long-term and (ii) establishing lending practices based on individual borrowers repayment capability. Background Household debt growth remained stable from 2017 to 2019 as the government was able to implement a consistent policy for household debt management. However, due to expansionary fiscal and monetary policies put in place in response to the COVID-19 pandemic, the household debt growth rate accelerated in 2020.In this year, the growth rate has slowed down somewhat since the government announced a series of policy measures to tighten mortgage regulations and boost housing supply. However, the household debt level still remains high even though credit loans which was a dominant factor in the last years household debt growth in the second half appears to have come down to a stable level. Koreas household debt has been regarded as one of the potential sources of financial risk, given its relatively high ratio against GDP and fast pace of growth compared with major economies. However, the increase in private sector debt in response to COVID-19, which is a common phenomenon, has been inevitable to some extent. In addition, due to the governments efforts at improving the structural soundness of household debt, it is unlikely that household debt turns into a systemic risk in the short-term. Against this backdrop, the government intends to preemptively manage household debt from a macroprudential perspective to prevent it from turning into potential risk factors. Regulatory adjustments at a micro level are also needed to ensure that a tightening of mortgage regulations do not curtail first-time homebuyers access to mortgages. The current regulation of loan-to-value (LTV) ratio, uniformly applied across all homebuyers, has limited opportunities for first-time homebuyers. Moreover
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Apr 22, 2021
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Apr 19, 2021
- Improved Securities Lending System for Retail Investors to Come into Place from May 3
- The FSC announced that the improvements made to the securities lending system for retail investors will come into place from May 3, 2021. From May 3, seventeen securities firms will begin to provide stock lending services in the amount of about KRW2 trillion to KRW3 trillion. Retail investors wishing to participate in stock short selling are required to complete pre-learning and mock trading programs which will be available from April 20. Based on the level of experience of individual investors, the maximum investment amount allowed for short selling will be differentially applied. Key Details Retail investors access to stock short selling has been limited as a shortage in securities lending led to the decline in the demand for stock borrowing and number of securities firms offering such service. As of the end of February 2020, securities lending services were available from only six securities firmsin the amount of about KRW20.5 billion. In order to improve retail investors access to stock short selling, the FSC and financial investment businesses will begin to offer more opportunities for stock borrowing. A total of twenty-eight securities companies will provide securities lending services. However, as these companies have different schedules for completing the development of their IT system, from May 3, stock lending service will be available from seventeen securities firms first with the rest expected to join within this year. As such, it is expected that a total of KRW2.4 trillion in stock lending will become available for KOSPI 200 and KOSDAQ 150 stocks on May 3.For retail investors, a maximum of sixty days of stock borrowing period is guaranteed unlike institutional or foreign investors. Safeguards and Regulations for Retail Investors The following safeguards have been put in place to bolster investor protection against excessive loss. First, investors should have securities lending agreements with their trading firms and those without an existing account nee