FSC promotes fintech and innovation in financial services. In order to encourage convergence and collaboration between finance and information technology, FSC launched the financial regulatory sandbox scheme in April 2019, through which more than one hundred ‘innovative financial services’ have been designated. The regulatory sandbox program allows fintechs and start-ups to test out their ideas without worrying about the regulatory impediments. In addition, Korea’s open banking system was fully launched in December 2019, opening up payment networks to both banks and fintechs through a joint network. By creating a financial data exchange platform, fostering MyData industry and opening up extensive sets of public financial data stored at major public institutions, FSC is also working to create an environment where big data and AI can play a larger role in finance. Policies intended to promote innovation also include providing tailored support to the Korean fintech firms to help them grow and scale up as global unicorns by easing regulations, expanding investment and providing assistance for overseas business expansion.
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Aug 22, 2012
- Key Improvements to the Short-term Benchmark Rate System
- BACKGROUNDThe FSC created a joint taskforce with affiliated agencies, the academia and industry groups on July 19, 2012 to come up with plans to improve the current system of short-term benchmark rate. The taskforce held its fifth meeting on August 21 to announce three major improvements out of various proposals discussed so far.KEY IMPROVEMENTS1. Introduction of short-term COFIXThe Cost of Funds Index (COFIX) was first introduced to replace the certificate of deposit (CD) rate in loan markets. As a benchmark lending rate, COFIX reflects banks’ costs of funding. However, an average maturity of loans linked to COFIX is nine to ten months, and COFIX is announced only once a month. Therefore, for floating-rate loans with shorter maturities less than one or two years, the CD rate is still preferred to COFIX.As a complementary measure, a short-term COFIX will be newly introduced, which will be announced every week. The short-term COFIX reflects banks’ average funding costs for short-term lending with a three-month maturity. The first announcement of the short-term COFIX is scheduled for the first week of November this year, tentatively.2. Stimulation of issuance of brokered CDsBanks agreed to issue brokered CDs to keep an average balance to a level of KRW 2 trillion. In order to enhance validity of the CD rate, 50% of the newly issued CDs worth KRW 1 trillion will be issued in brokered CDs with a three-month maturity.3. Improved calculation of the CD rateThe Korea Financial Investment Association will create basic principles on quote submissions, and improve the way the CD rate is calculated in a more valid and transparent manner.The basic principles and stricter disclosure rules will be in place by September this year. The FSC will pursue amendment to the supervisory regulations on the benchmark rate in the second half of this year.*Please read the attached file for details.
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Aug 17, 2012
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Jul 09, 2012
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Jun 27, 2012
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Oct 21, 2011
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Aug 17, 2009
- Facility Investment Fund
- In a follow-up measure to the July 2 announcement on ‘Plans to Promote Corporate Investment’ released through the Ministry of Strategy and Finance, specific plans to promote facility investment in the corporate sector have been devised. In accordance with the original plan to inject KRW 5 trillion into establishing a Facility Investment Fund through state-owned Korea Development Bank (KDB) and Industrial Bank of Korea (IBK), an initial investment of KRW 2 trillion will be made.Specific DetailsA total amount of KRW 2 trillion will be injected to the new Fund, whereas KDB will initially contribute KRW 0.6 trillion in addition to KRW 0.8 trillion through the Korea Policy Banking Corporation (KPBC) once it is established in October; the remaining KRW 0.6 trillion investment will be made by IBK.The method of investment will be either direct investment through various channels as issuing preferred shares, common shares, long-term corporate bonds, convertible bonds, as well as direct loans, or indirect investment through private funds and private equity funds (PEF). The funds will be available in multiple currencies (won, dollar, yen, euro, etc.) as required by specific projects, and the ratio of public funds being injected will be maintained around 50% of the total investment while the rest will be met by funds from the private sector.The private funds and PEFs eligible for injection of funds will have to meet certain criteria as total size of investment, track record, fees, and a minimum of 90% of funds required to be invested into facility investment. Further eligibility requirements will be set by KDB, IBK, and the Korea Financial Investment Association (KOFIA). KDB and IBK will jointly invest into these funds up to 40% of the total investment mostly through issuing common shares.The funds from KDB will concentrate on facility investments made to new-growth industries, infrastructure projects, long-term investments with higher than normal risk, and other large-scal
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Jul 06, 2009
- Plans to Finance Green Growth Related Industries
- The Korean government plans to promote investment in green growth related industries. The plan is aimed at creating funds fit for the industries and expanding sources of financing as a way to prevent potential bubble in the industries.BackgroundBoth financing in the financial market and by the government are not fit for green growth related industries because 1) projects in the industries have a lot of uncertainties, 2) it will take long to realize return on investment in those projects, and 3) the external benefit is larger than that of other projects.Directions of the planTo attract private investment, the government decided to remove uncertainties: The government will introduce a certification system to approve green technologies and projects, and verify companies involved in green growth related projects as “green enterprises” if they qualify for government’s requirements.The planThe plan is formulated on the basis of the three stages of development.Stage 1: RD and commercializationTo promote RD projects and their commercialization, the government will increase fiscal support from 2.0 trillion won in 2009 to 2.8 trillion in 2013, along with 300 billion won funds set up by the KDB (Korea Development Bank).SMEs doing projects in stage 1 will access fiscal funds exclusive for them, which will be expanded form 60 billion won in 2009 to 1.1 trillion won in 2013.Credit guarantee offered to “green enterprises” and green projects will also be increased almost three folds from 2.8 trillion won in 2009 to 7 trillion won in 2013.Stage 2: Industries maturingTo boost maturing industries, the “green funds” of 500 billion won will be formed by the KDB and National Pension Fund in the last half of this year, along with long-term deposit products and “green bonds” launched by banks to attract private investors. The government will grant tax incentives on capital gains: no tax on dividend up to 30 million won, among others.Stage 3: Industries fully grownTo suppo
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Aug 25, 2008
- FSC’S Policy Efforts for Financial System Advancement and Future Tasks
- Since the establishment of FSC, instability in the external environment has aggravated due to the sub-prime mortgage related global stock market shock, global investment banks’ fragility, anxiety of stagflation due to combined factors of increased oil price and economic recession. Internally, there have been difficulties in the construction and SME sectors due to the domestic recession. Under such challenging circumstances, FSC has not only provided support to stabilize the domestic financial market, but also to perform an essential role as a growth engine to drive the Korean economy. In particular, FSC is focusing on policies to further develop the financial industry, offer financial support to create a sharing society, and construct a global financial network, among others.1. Policies implemented since the establishment of FSC- Exert various policy efforts to stabilize the financial marketFSC has closely examined the money flow at home and abroad by constructing a market monitoring system with the Financial Supervisory Service (FSS) and other financial institutions in order to manage the financial market volatility caused by the global credit crunch.FSC has mitigated the market anxiety through active information notification and strengthened supervision. For example, FSC attempted to intercept the spreading anxiety by notifying the public of correct government information on the domestic banks’ foreign currency liquidity status and the rumor about the September crisis. In addition, FSC has not only strengthened supervision on risk factors such as marketable demand deposits in the banking industry, project finance loans, foreign currency liquidity, possibilities of unfair transactions, including market price control, but also expanded the foundation to detect and respond to risks at an early stage by applying the Early Warning System in the financial sector.- Promote political tasks to develop the financial industryFSC has triggered innovation in the financial
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Aug 27, 2007
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Dec 18, 2006
- New Measures Proposed to Advance the Bond Market
- The Financial Supervisory Commission announced a set of proposals aimed at advancing the bond market on December 14. The new proposals are the work of a joint public-private task force created in February this year to recommend improvement in four key areas—corporate bond underwriting, market liquidity, trading of repurchase agreements, and disclosure—and help raise the transparency and efficiency of the bond market.1 The legal and regulatory amendments needed for the changes proposed by the task force are expected to be completed by June, 2007.Bond Market TrendSince the financial crisis, the bond market has shown a steady growth with the total issue amount and the trading volume increasing more than two-fold and five-fold, respectively, since 1998. Recently, however, corporate debt-financing has been declining amid falling capital demand for corporate investment and investors showing preference for cash accumulation.Corporate Bond Underwriting by Securities CompaniesAs a result of weak capital demand and the growth of privately placed issues, the market for corporate bond underwriting has been shrinking, putting a downward pressure on profits securities firms generate from underwriting.Securities firms authorized to underwrite bond issues numbered 45, 31 of which took part in an actual bond underwriting. Fees generated from underwriting averaged KRW3 billion for each securities firm in 2005.Because local securities firms compete more on underwriting fees than on funding ability, risk analysis, raising interest among investors, and other critical underwriting capabilities, they have thus far failed to build the kinds of reputation that investors generally expect. Local securities firms are also continually exposed to legal risks for inadequate attention to investor protection, e.g., poorly administered due diligence and faulty prospectus.Task Force ProposalAs a way to discourage unhealthy competition and improve the overall caliber of corporate bond underwriting
