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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Feb 28, 2020
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Feb 28, 2020
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Feb 27, 2020
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Feb 21, 2020
- Government to Closely Monitor Business Needs amid COVID-19 Outbreak
- FSC Vice Chairman Sohn Byungdoo convened a meeting on February 21, 2020 to assess the implementation of the financing support intended to help SMEs and small merchants amid the COVID-19 outbreak.PROGRESSBetween February 7 and 18, a total of KRW322.8 billion (5,683 individual cases) in loans and guarantees as well as loan and guarantee extensions were provided to the SMEs, small merchants and self-employed business owners whose businesses have been hit by the spread of COVID-19.► SME financing by policy banks: KRW16.2 billion in new loans, KRW31.96 billion in loan extensions, KRW25.48 billion in new guarantees and KRW62.1 billion in guarantee extensions► Small merchant financing by policy banks: KRW1.34 billion in new loans, KRW1.53 billion in new guarantees and KRW91.6 in guarantee extensions► Local banks provided KRW86.45 billion (179 cases) in total: KRW17.14 billion in new loans and KRW42.88 billion in maturity extensions and deferred payments► For small businesses, credit card companies also provided about KRW4.47 billion in discounted interest rates and late fees, and about KRW380 million in deferred payment plans.FURTHER PLANSThe government will continue to review how the COVID-19 financing support measures are being provided to the businesses in need and ensure a prompt delivery to the affected companies.While closely monitoring the business needs, the government will draw up additional measures when necessary.* Please refer to the attached PDF for details.
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Feb 14, 2020
- Measures to Improve Regulatory Framework on Hedge Funds
- The Financial Services Commission and the Financial Supervisory Service unveiled on February 14, 2020 an evaluation of hedge fund market and the measures to improve its regulatory framework. The measures are intended to ensure the autonomy of private fund management while addressing regulatory inadequacy and vulnerabilities found in the assessment by introducing a minimum necessary level of regulations.BACKGROUNDHedge funds play an important role in providing venture capital in startup investment ecosystem from business setup to scale-up to exit. However, the recent misselling, inadequate liquidity management and unlawful and/or unfair activities in the market have shown the necessity to improve the regulatory framework.Against this backdrop, the government unveiled on November 14 last year the Measures to Strengthen Investor Protection with High-risk Investment Products, which a) prevented sales of public offering funds in the form of private funds, b) placed stronger investor protection for ‘highly complex investment products,’ c) raised entry requirements for retail investors from KRW100 million to KRW300 million, and d) tightened regulation standards for financial companies selling OEM funds.From November 2019 to January 2020, the government conducted a review on the hedge fund market to assess potential risks and vulnerabilities. The assessment was made on 52 asset management companies and 1,786 private funds worth KRW 22.7 trillion. Most hedge funds did not show risky operation methods or investment structures unlike the large scale suspension of redemption cases surfaced recently.Based on this market review, the government has prepared the following measures in order to strengthen investor protection and ensure credibility in the market.KEY MEASURESI. ENHANCE RISK MANAGEMENT BASED ON MARKET DISCIPLINESThe government will work to establish a foundation in which different market participants and players can provide a supervisory role and “checks and balan
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Feb 13, 2020
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Feb 07, 2020
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Feb 03, 2020
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Jan 28, 2020
- Government Bolsters Market Monitoring amid Coronavirus Outbreak
- FSC Vice Chairman Sohn Byungdoo convened a meeting on January 28, 2020 to assess the impact of the spread of coronavirus on the domestic and global financial markets. Amid rising concerns over economic and financial markets at home and abroad, the Korean government has put in place a response system, working on preventive measures and monitoring its impact on our economy.The following is a summary of Vice Chairman Sohn’s remarks:The financial markets in Korea remained stable until mid-January following the conclusion of the first phase deal between the US and China over their trade conflicts and due to eased tension in the Middle East. However, with the spread of the new coronavirus, volatility increased last week.Today, KOSPI fell 3.1 percent while the won-dollar exchange rate rose 0.7 percent (up 8.0 won).Based on our past experiences with the SARS (severe acute respiratory syndrome) outbreak in 2003, the avian influenza in 2009, and the Middle East respiratory syndrome (MERS) in 2015, the impact of the new coronavirus outbreak on domestic financial markets will depend on how extensive it spreads in Korea.The Korean financial markets may experience rising volatilities for a while due to increased appetite for risk-free assets.However, Korea’s external soundness remains solid as its foreign exchange reserves (USD408.8 billion by the end of 2019) and net foreign assets in debt instruments (USD479.8 billion by end of Q3 2019) increased to record high levels.In order to stabilize financial markets, the government should bolster the 24-hour market monitoring system and be prepared for any volatility. The government should also work to provide financial assistance to the industries that may be heavily affected by the epidemic, such as the tourism industry.* Please refer to the attached PDF for details.
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Jan 21, 2020
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Jan 20, 2020
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Jan 08, 2020
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Dec 16, 2019
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Dec 12, 2019
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Dec 05, 2019
- Measures to Improve Management of Risk Exposure in Project Finance
- The government introduced its plans to improve the management ofrisk exposure in real estate project finance on December 5.BackgroundProject financing in real estate is a financing mechanism based onthe business value of the project and the expected cash flows of the project inthe future. Due to the recent financial deepening and continuing low yields,project financing has increased significantly. Project financing provides an efficientway to finance real estate or infrastructure development projects.However, due to heavy reliance on the expected value of theproject, risk exposure is highly dependent on market conditions. Without propermanagement of risks, or in the case of a distortion of profits or risks, it maypose a threat to financial stability.Risk exposure in project financing has continued to increase especiallyin non-bank sectors since 2013. The prevalence of high-risk project financingloans, such as bridge loans, has dropped whereas the level of exposure bysecurities companies and specialized credit finance companies increased. Debtguarantees in project financing also increased as the burden of credit exposureshifted from construction companies to financial institutions.Recent TrendsAt the end of June 2019, the total amount of debt guarantees inproject financing stood at KRW28.1 trillion, out of which KRW26.2 trillion issuedby securities companies. The outstanding loan balance in project financing stoodat KRW71.8 trillion, rising on average 11.6 percent a year from KRW39.3trillion at the end of 2013. By the end of June 2019, both the default rate andthe sub-standard asset ratio continued to decline since 2013 from 13.0 percentto 1.9 percent and 16.9 percent to 3.0 percent, respectively, due to anincreased volume in project financing loans.Key MeasuresI. Improvingthe Soundness of Debt Guarantees in Project Financing► Establishing anupper ceiling on debt guaranteesUnder the current system,securities companies face no upper limits on issuing debt guarantees
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Nov 27, 2019
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Nov 18, 2019
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Nov 14, 2019
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Nov 08, 2019
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Oct 31, 2019