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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Mar 29, 2021
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Mar 25, 2021
- FSC to Closely Monitor Market Situations and Gradually Roll Back Crisis Response Measures
- Vice Chairman Doh Kyu-sang held the 37th financial risk assessment meeting via teleconference on March 25 and discussed the progress in the implementation of the COVID-19 financial support for small merchants and SMEs. The following is a summary of Vice Chairman Dohs remarks. (Pandemic Response Measures) In response to the COVID-19 pandemic, the government implemented a KRW175 trillion-plus emergency financial support package to provide support for small merchants and SMEs, stabilize financial markets and help businesses in key industries with liquidity shortages. Thanks to the active support shown by the financial institutions, markets quickly bounced back and financial difficulties experienced by small merchants and other vulnerable groups began to ease. On the Korean governments bold response to the crisis situation, the IMF in January this year released a positive assessment, and the OECDs recent growth forecast expects Korea to achieve a full recovery within this year. Bold and preemptive responses were effective given that the scale of policy response had to exceed market expectation at a time when extreme anxieties were spreading across markets. However, with signs of an economic recovery in the US, inflation expectations have been rising as well as the long-term bond yields. In this regard, the government will closely monitor market situations and work on preemptive management to prepare for a possible rate hike in domestic markets. In addition, there have been growing concerns about inappropriate trading activities in stock markets. There are active discussions going on in this regard at the National Assembly to strengthen penalties on unfair and inappropriate trading activities, such as price rigging. The government will closely cooperate with the relevant institutions to work on the prevention of inappropriate trading activities. (Maturity Extension Payment Deferral) Since April 1 of last year, all financial institutions made available maturity extensions
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Mar 24, 2021
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Mar 18, 2021
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Mar 16, 2021
- AML Requirements of Virtual Asset Service Providers to Take Effect from March 25
- The FSC announced that the revised rule that mandates AML duties on virtual asset service providers (VASPs) will go into effect on March 25, 2021, as the government approved the revised Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information at a cabinet meeting held on March 16. Key Provisions I. Scope of VASPs Virtual asset service providers are virtual asset trading service providers, virtual asset safekeeping and administration service providers and virtual asset digital wallet service providers that are engaged in the purchase and sales, exchange and transfer, safekeeping and administration, intermediation and brokerage of virtual assets and virtual asset transactions. II. Business registration of VASPs VASPs are required to register their business with the Korea Financial Intelligence Unit (KoFIU) prior to the commencement of their business operation. Existing businesses that qualify as VASPs should register within six months (until September 24, 2021) or they will be subject to penalties. III. AML duties of VASPs Beginning on March 25, 2021, the registered VASPs will be subject to the anti-money laundering (AML) requirements, such as duties to verify identities of customers, file reports on suspicious transactions, etc. The authorities will carry out inspection and supervision on VASPs with regard to their compliance of AML requirements from the time of business registration. As the requirement to check and verify the identity of customers applies only to the registered businesses, consumers are advised to check the status of business registration and practice caution against VASPs requesting information about their resident registration numbers. * Please refer to the attached PDF for details.
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Mar 15, 2021
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Mar 11, 2021
- FSC Announces Revisions to the Enforcement Decree of the FSCMA
- The FSC announced a revision proposal for the Enforcement Decree of the Financial Investment Services and Capital Markets Act on March 11. The revision proposal contains measures to bring improvements to the Chinese wall regulation,ease reporting duties on consignment, set standards on financial investment businesses credit extension to overseas branches and restrict investors from placing multiple orders for IPO subscription. The revision proposal will be put up for public notice until April 20 and will go into effect on May 20, 2021. Key Revisions I. Chinese Wall Regulation The revision proposal promotes more autonomy and accountability of financial investment businesses with respect to their internal management of Chinese wall policies. It specifies the types of information subject to the Chinese wall regulation, requirements for internal control standards, etc. In this regard, material nonpublic information and information on their clients asset management status will be subject to the Chinese Wall regulation. Financial investment businesses will be required to maintain specific internal control standards with respect to the prevention of information sharing, specific methods for information barriers, exemptions, etc. An independent board-level position should oversee the management of the internal control standards and the relevant information will be subject to disclosure. II. Consignment Rules The revised Act allows in principle financial investment businesses to consign their work to third-party agents except for duties pertaining to internal control. In this regard, the revised Enforcement Decree specifies internal control duties as duties related to compliance, internal audit and inspection, risk management and credit risk analysis evaluation. Their reporting duty on consignment to the FSC will also be changed from seven days prior to the consignment to within two weeks after the consignment. III. Credit Extension to Overseas Branches Financial investment
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Mar 11, 2021
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Mar 10, 2021
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Mar 09, 2021
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Mar 09, 2021
- Financial Authorities to Provide Continued Support and Prepare for Post-pandemic Economy
- Vice Chairman Doh Kyu-sang held the 36th financial risk assessment meeting via teleconference on March 9 and discussed the implementation of the COVID-19 financial support programs. The following is a summary of Vice Chairman Dohs remarks. (Financial Market Monitoring) With COVID-19 vaccines and a large-scale stimulus plan in the US, positive outlooks for economic recovery are spreading. However, expected inflation and interest rate hikes in overseas markets require close market monitoring as they may place cost burdens on domestic companies and households financing needs. As such, the authorities will closely monitor risks and prepare appropriate response when necessary. (COVID-19 Financial Support) Last week, financial institutions agreed to extend the availability of maturity extension and payment deferral programs for small merchants and SMEs until the end of September 2021. State-backed financial institutions also plan to offer an extension of loans and guarantees for middle market enterprises until September this year. The low interest rate lending support for small merchants will also be available for one more year. In order to help businesses prepare for a post-pandemic era, the government will extend the application period of the key industry stabilization fund, which is currently set to expire at the end of April this year, and find ways to make use of the fund to help businesses prepare for a post-pandemic era. In addition, the government will continue to provide support through the corporate asset purchase program.This year, on-site consulting services will also be made available to help businesses with their financing needs. (Mortgage Loans) The government has introduced diverse measures to manage household debt and stabilize the housing market. Current homeowners purchasing another house with mortgage loans in regulated areas are required to move into new home and sell their current properties within a specified time frame. In this regard, the financia
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Mar 08, 2021
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Mar 02, 2021
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Feb 26, 2021
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Feb 22, 2021
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Feb 22, 2021
- FSC to Strengthen Liquidity Management of Specialized Credit Finance Companies
- The FSC announced a set of measures aimed at strengthening the liquidity management of specialized credit finance companies on February 22. The measures include (a) establishing best practice guidelines, (b) strengthening disclosure requirements and (c) gradually reducing the maximum leverage on credit finance (non-credit card) businesses. Background Specialized credit finance businesses are lenders without deposit-taking functions.They usually finance their business through borrowings or the issuance of corporate bonds and asset-backed securities (ABS). In particular, their heavy reliance on debt finance, about 73.9 percent of their financing,creates a problem of risk transfer to financial institutions holding their corporate bonds, especially if credit finance companies face solvency problems. In this regard, there have been concerns about credit finance companies turning into a conduit of systemic risk in times of an unexpected economic shock such as COVID-19. Therefore, liquidity problems of credit finance businesses can pose a risk not only to the borrowers with mid-to-low credit backgrounds but also to the real economy as they may cause a drop in consumption and corporate facility investment. Key Measures I. Best Practice Guidelines on Liquidity Management The best practice guidelines on specialized credit finance companies liquidity management will be introduced for implementation beginning in April this year. - (Target) Bond issuing credit finance companies and those with more than KRW100 billion in total assets will be subject to the new guidelines. - (Role of Board and Management) Board of directors should oversee the establishment and operation of liquidity management strategies and the company management should prepare specific management process and criteria and regularly report to its board members. - (Liquidity Risk Indicators) Major liquidity risk indicators include corporate bond maturity distribution, liquid asset ratio, short-term debt ratio, etc.
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Feb 19, 2021
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Feb 18, 2021
- FSC Announces Rules Change to Improve the Recovery and Resolution Regimes of SIFIs
- The FSC announced a revision proposal for the Enforcement Decree of the Act on the Structural Improvement of the Financial Industry on February 18, which will be put up for public notice from February 19 to April 1, 2021. The revision proposal to the Enforcement Decree is a follow-up to the revised Act passed at the National Assembly in December last year which is aimed at strengthening the recovery and resolution regimes of the systemically important financial institutions (SIFIs) as recommended by the Financial Stability Board. The revisions are expected to help improve the preparedness and responsiveness of SIFIs in their crisis management. Key Revisions (Selection of SIFIs) The FSC should select SIFIs every year after considering their function, scale, ties to other financial institutions and influence on the domestic financial markets. In this regard, the selection of SIFIs will be confined to banks and bank holding companies. (Recovery and Resolution Plans) SIFIs will be required to prepare and submit their own recovery plans to the Financial Supervisory Service within three months from the day of being designated as a SIFI. The FSS will then immediately pass on their recovery plans to the Korea Deposit Insurance Corporation (KDIC) and be required to evaluate the recovery plans and file evaluation reports to the FSC within three months. At the same time, the KDIC will be required to draw up resolution plans and submit them to the FSC within six months. A deliberative body within the FSC will then decide on the final approval of both recovery and resolution plans within two months. In this regard, recovery plans should have been approved at a board meeting prior to being submitted and contain specific details about the role and responsibilities of board members and executives, major business areas, standards of determining crisis situations, specific crisis management measures, etc. The deliberative body within the FSC will be made up of an FSC commissioner (FS
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Feb 17, 2021
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Feb 16, 2021
