FSC works to ensure that finance plays a key role in developing innovative businesses and supporting the real economy, thereby fueling Korea’s more vibrant economic growth. Promoting advanced financial industry, stable financial markets, fair market order and reliable consumer protection are among FSC’s key policy agenda. Digital transformation and big data are increasingly playing larger roles in various aspects of financial services. In the era of 4th industrial revolution and digital economy, finance will help boost growth potential and create jobs as the government seeks to advance its Digital New Deal policy.
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Feb 08, 2021
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Feb 03, 2021
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Feb 01, 2021
- Securities Firms to Play Bigger Role in Corporate Financing and Venture Capital Market
- The FSC decided on the measures to promote the role of securities firms in corporate financing and venture capital market on January 29. Background To help our economy continue to search for sustainable growth areas and create quality jobs, an innovation-based development is necessary. Amid an acceleration of digital transition and the spread of contactless services, promoting new industries based on technology and intangible assets, such as IT and bio health, should take place. The government has worked on regulatory improvements to boost the role of securities firms in corporate financing.As such, the number of securities firms with equity capital of KRW3 trillion or more increased from five in 2013 to eight in 2019, and their high value-added services such as investment banking has expanded. However, the securities firms role in providing venture capital to innovative SMEs has been lagging. Instead, offering investor credit exposure and providing debt guarantee on real estate project financing took up most of their business. As such, the following measures are intended to promote the securities firms role in providing venture capital to innovative SMEs. Key Measures A. Re-establishing the Role of Comprehensive Financial Investment Businesses Under the current system of comprehensive financial investment business entities, the total credit exposure offered to businesses rose from KRW0.4 trillion in 2013 to KRW14.3 trillion at the end of June 2020. Business loans to SMEs has taken up 51.7 percent (or KRW7.4 trillion), which indicates a significant rise. However, out of KRW7.4 trillion, SME loans excluding SPCs and real estate project financing stood at just KRW0.3 trillion, representing only 2.0 percent of the total credit exposure to businesses. As such, adjustments will be made to the rules on comprehensive financial investment business entities capital exposure limits to remove real estate-related credit offering from the currently allowed special capital exposu
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Feb 01, 2021
- FSC Announces Plans to Improve Competitiveness of Publicly Traded Funds
- The FSC unveiled specific plans to improve the competitiveness of the publicly traded fund market on January 29, with an aim to make the sales and management process more investor-oriented. The plans include (a) increasing the accountability and efficiency of fund management, (b) making the sales process more investor-oriented, (c) encouraging the introduction of diverse types of funds and (d) strengthening support for investors. BACKGROUND Publicly traded funds serve as an importance source of asset management for the general public, allowing small-sum investment and fit for medium risk/medium return appetite. They are also important as they provide capital to productive sectors and help to spread out the real estate-oriented household asset structure. However, the volume of publicly traded funds has stagnated recently as retail investors have become less inclined to invest in publicly traded funds due to the availability of private equity funds, equity-linked securities and other competitive products as well as the relatively low returns, cost burdens related to sellers compensations and fees, inappropriate fund management practices, etc. Meanwhile, amid a low interest rate environment and abundant market liquidity, the general publics interest in financial investment has grown, particularly in direct investing. Over the past 10 years, the volume of private equity funds grew 268.3 percent while that of publicly traded funds rose only 38.3 percent. Stock funds except exchange-traded funds (ETFs) fell 53.2 percent while ETFs and money market funds (MMFs) rose 759.0 percent and 57.3 percent, respectively. The stagnant development of the publicly traded fund market can be attributable to (a) the subpar performance of fund management in generating returns, (b) the declining trust on fund sellers, (c) the lack of diversification in the types of funds and (d) the lack of adequate support for investors. Against this backdrop, the authorities will seek following strategies
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Jan 28, 2021
- FSC Announces Specific Plans for Financial Innovation and Digital Finance
- The FSC announced a detailed work plan for financial innovation and digital finance on January 28, which aims to spur the growth of fintechs, promote the spread of online-based financial services and build financial infrastructures necessary for digital innovation. Background The government has been working to promote digital finance and innovation in financial services through a variety of policies. The Special Act on Support for Financial Innovation went into effect in April 2019, which introduced a financial regulatory sandbox program. The Fintech Center Korea was established in January 2018 to provide comprehensive support for fintech startups. In an effort to promote a digital transformation in the financial industry, the fintech investment guidelines were introduced in October 2019 and more innovative types of businesses such as MyPayment came into being. In December 2019, open banking service was introduced, and in January 2020, the revisions to the Credit Information Use and Protection Act were finalized which will promote the use of data and the growth of MyData industry. In order to strengthen data security and ensure safety in payment systems, enhanced security measures were introduced in the wake of the COVID-19 pandemic. Against this backdrop, the FSC will work on the following to further promote innovation and digital transformation in the financial industry. Key Policy Tasks A. Advancement of Fintech Industry (1) Introduce a digital sandbox through which fintech startups can have opportunities to virtually test their new business ideas (from Jun-Aug 2021) (2) Establish a comprehensive fintech support system by working on a legislation focused on nurturing fintechs (within 2021), further improving the management of the regulatory sandbox program (Jan 2021) and expanding financial support through state-backed financial institutions and private sector investments (Q1 2021) (3) Work to boost the organizational capabilities of the relevant divisions and ag
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Jan 19, 2021
- FSC Announces 2021 Work Plan
- The FSC unveiled its work plan for 2021 on January 18, highlighting the four areas of policy tasks as follows(a) maintaining the COVID-19 financial support and managing potential risks, (b) supporting K-New Deal initiatives for a green and digital economy, (c) promoting financial innovation and digital finance and (d) strengthening financial consumer protection and support for vulnerable groups. KEY ACHIEVEMENTS IN 2017-2020 A. STEADY MAINTENANCE OF FINANCIAL STABILITY AMID COVID-19 PANDEMIC Over the past four years, the FSC has focused on maintaining stability in the financial system as its utmost policy priority. In the wake of the COVID-19 pandemic, the FSC responded by quickly drawing up and providing financial support packages worth KRW175 trillion-plus and worked to prevent the crisis from spreading further into the financial markets. B. SUCCESSFUL CHANNELING OF FUNDS TO PRODUCTIVE SECTORS The FSC has worked to expand the supply of capital into more productive sectors by introducing innovative ways to assess corporate credit and through revisions to the relevant capital markets rules. In addition, the public sector has provided equity-based funding sources via growth ladder fund and other government-backed financing channels. C. ACTIVE PROMOTION OF COMPETITION AND INNOVATION IN FINANCIAL INDUSTRY The FSC has granted new business licenses to internet-only banks, insurance firms and real estate trust companies based on an industry-level competition assessment. In order to promote and expand financial innovation, the FSC has also worked to establish the necessary infrastructures, including the regulatory sandbox, open banking and MyData in financial services. D. ENHANCED INCLUSIVENESS VIA MICROFINANCE SUPPORT AND CONSUMER PROTECTION The FSC has worked to reduce the interest payment burdens of lower income households by lowering the maximum interest rate that can be charged on loans from 24% to 20%. E. IMPROVED FAIRNESS BASED ON RULES AND PRINCIPLES The FSC has al
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Dec 23, 2020
- Government Unveils Plans for K-New Deal Fund
- The government announced its plans for the K-New Deal fund at the 23rd Meeting of the Central Economic Response Headquarters held on December 23.PUBLIC SECTOR-LED NEW DEAL FUNDFrom 2021 to 2025, the government aims to raise a total of KRW20 trillion public sector-led New Deal fund through matching investments from the private sector. The public sector funds in the amount of KRW7 trillion will be invested in the fund over the next five years, which will pump-prime private sector investments in the amount of KRW13 trillion.In 2021, the government aims to launch and operate a New Deal fund in the amount of up to KRW4 trillion, thirty-five percent of which will be funded by the public sector including fiscal spending of KRW510 billion and investments from the Korea Development Bank and Korea Growth Ladder Fund. The remaining portion of the fund will be financed with private sector investments from both institutional and retail investors. Retail investors will be allowed to invest via public offerings of privately placed funds, which will make up about five percent of the total private sector investments.INVESTMENT ALLOCATION PLANThe public sector-led New Deal fund in 2021 will be allocated according to policy priorities and the purpose of the investments. First, fund allocation will be based on a bottom-up approach, reflecting investment proposals from the private sector. The investment will be focused on six major New Deal sectors—data, network and artificial intelligence (DNA) sectors, future car green mobility sectors, eco-friendly green industries, New Deal services, SOC digital logistics and smart manufacturing smart farming sectors.At the same time, the fund will invest in New Deal sector businesses for their New Deal related projects on MAs, acquisition of technologies, RD, facility investment and business transformation projects. The proportion of investments on New Deal businesses will make up about seventy to ninety percent with about ten to thirty percent o
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Dec 14, 2020
- FSC Chairman Holds Press Briefing and Discusses Policy Outline for Next Year
- FSC Chairman Eun Sung-soo held a virtual press briefing on December 14 and discussed key policy plans for the next year.The following is a summary of Chairman Eun’s remarks.(LOOKING BACK TO 2020) In the wake of the pandemic declaration earlier this year, financial markets fell into turmoil temporarily. Contractions in economic activities put extra burdens on small merchants and self-employed business owners. Then, the KRW175 trillion-plus emergency support programs were introduced by the government to respond to the situation in a prompt and preemptive manner. As a result, the OECD forecast Korea’s 2020 economic growth to be the first among its member economies. In recent weeks, KOSPI has been setting record highs as well.This successful market turnaround was made possible due to the effectiveness of K-quarantine and economic response measures on top of strong corporate earnings performance. While focusing our attention on the COVID-19 crisis management, the FSC has also worked on financial innovation, consumer protection and fair economy measures this year. The revision to the Credit Information Use and Protection Act built foundations to develop data industry. The consultative body meetings on digital finance have focused on establishing an environment for fair competition between financial companies, fintechs and big techs. The Financial Consumer Protection Act is scheduled to go into effect next year and the newly passed legislation on the supervision of non-holding financial groups will help remove loopholes. In the meantime, however, the issue of large scale investor damages in the wake of redemption halts by some PEFs remains regrettable.(2021 FINANCIAL POLICY OUTLINE) The first policy task is overcoming the pandemic crisis. Overcoming the spread of the virus requires prompt treatment, preventive measures and development of vaccines. The COVID-19 financial policy requires a well-balanced functioning of financial support for the vulnerable sectors, financi
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Dec 02, 2020
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Nov 18, 2020
- Government to Increase Amount of IPO Shares Available for Retail Investors
- BACKGROUNDWith the recent surge in the number of retail investors in stock trading, their demand for active participation in initial public offering (IPO) has increased. In the IPO process, however, it is important to secure the active participation of institutional investors to precisely price an IPO share. Securities firms as underwriters also play an important role in allocating shares. As stock prices fluctuate widely after an IPO, the expanded participation of retail investors in IPOs could make them more vulnerable to investment risks. The measures announced today are intended to ensure active participation of institutional investors and autonomy of the underwriters in an IPO process, while allowing more participation of retail investors.KEY MEASURES(ALLOCATION METHOD) Currently, shares available for retail investors, more than 20% of IPO stock, are allocated usually in proportion to the number of subscribed shares, or the amount of deposits. To give equal opportunities for all subscribers who deposited a minimum amount, more than half of shares available for retail investors will be allocated in the same amount, regardless of the amount of deposits.(LARGER ALLOCATION FOR RETAIL INVESTORS) i) Retail investors will be allocated a maximum 5% of unsubscribed shares for employee ownership; ii) As the 10% rule, which allocates 10% of public shares to high-yield funds, is set to expire by the end of this year, the amount of shares allocated to high-yield funds will be reduced to 5% from next year, while the remaining 5% will be allocated to retail investors.(SUBSCRIPTION AND ALLOCATION PROCESS) Multiple subscriptions by a retail investor using different underwriters in an IPO will be restricted. Securities firms will be required to inform retail investors of investment risks in subscription advertisements.IMPLEMENTATION SCHEDULEThe new rules will apply to securities registrations submitted after the revision to the Regulations on Securities Underwriting Business by
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Nov 18, 2020
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Nov 06, 2020
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Sep 03, 2020
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Aug 27, 2020
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Jul 30, 2020
- Government Announces Plans to Provide Targeted Support to 1,000 Innovative Firms
- The government announced its plans to designate a thousand innovative firms over the next three years and provide targeted financial support at the 12th Meeting of the Central Economic Response Headquarters held on July 30.BACKGROUNDWith the 4th industrial revolution and a protracted pandemic situation, rapid changes are taking place in different industries, including the rapid development of ‘untact’ services and digital transformation. In order to provide sufficient financial support to facilitate the growth of more innovative businesses, close cooperation is essential between the financial sector and different industries. It is also important to establish a cooperative framework through which sufficient investments from both the public and private sectors are made available to innovative firms.Against this backdrop, the government has drawn up plans to more systematically provide financial support to innovative businesses by promoting close cooperation between the financial sector and enterprises.KEY MEASURESI. SELECT 1,000 INNOVATIVE FIRMS IN DIVERSE INDUSTRIESThe government aims to select one thousand innovative firms throughout different industries, such as the digital and green new deal industries, future car, bio health, system semiconductor, materials, parts and equipment industries, as well as those planning to transform their businesses fit for new industries and those that are reshoring back to the country.So far, 32 innovative firms have been selected with the goal of designating 200 business entities by the end of this year. The government plans to select 200-plus innovative firms in every six-month period until the end of 2022.II. PROVIDE FINANCIAL SUPPORT TO SELECTED FIRMSFor those selected as ‘innovative businesses,’ the government will work to provide financial support even for those with less favorable financial records, based on their innovativeness and technological prowess.Diverse financial support programs will be made available depend
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Jul 24, 2020
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Jul 06, 2020
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Jun 11, 2020
- FSC Chairman Highlights the Role of Finance in Post-pandemic Economy
- FSC Chairman Eun Sung-soo attended the Financial Development Review Committee meeting on June 11 and spoke about the crucial role of finance in a post-COVID-19 era economy.The following is a summary of Chairman Eun’s remarks.CHANGING ENVIRONMENT CAUSED BY PANDEMICThroughout history, large-scale epidemics triggered structural changes in social and economic orders. The COVID-19 pandemic, too, will bring an irreversible paradigm shift in the political, economic and social orders throughout the world. Many experts expect that a return to normalcy will not be possible. Therefore, forecasting the new paradigm and preparing for changes are important tasks.(CHANGING INTERNATIONAL ORDER) The future of the Korean economy will depend on how well we prepare for protectionist trade policies and structural changes in global trade order and supply chains.(CHANGING PATTERNS IN PRODUCTION, DISTRIBUTION CONSUMPTION) Started as a mere phenomenon, access to ‘untact’ or non-face-to-face services has grown to become a part of ordinary economic activities. The changing patterns of production, distribution and consumption, such as more use of telecommuting, ‘untact’ economic services and online shopping, are expected to bring about fundamental changes in the economic structure.In this regard, digital transformation is no longer an option but a necessity. The Korean economy’s future competitiveness hinges upon how swiftly and effectively we carry out digital transformation for changing patterns in our economic activities.(GROWING DEMAND FOR SOCIAL SAFETY NET) The COVID-19 pandemic has awakened our awareness for the safety of society. More attention is paid to inclusive economic policies. The changes in global supply chains and digital transformation will unfortunately lead to job losses in some sectors and create polarization. As such, the demand for social and economic safety nets is expected to increase.ROLE OF FINANCE IN POST-PANDEMIC ECONOMYAgainst this backdrop, the committ
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Jun 11, 2020
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Mar 27, 2020
- Vice Chairman Emphasizes Importance of Effective Implementation of COVID-19 Financial Support
- FSC Vice Chairman Sohn Byungdoo held a meeting on March 27 via conference call to examine the implementation of the government’s COVID-19 emergency support package and financial market stabilization measures.The following is a summary of Vice Chairman Sohn’s remarks:► FINANCING SUPPORT: Low-rate loans (1.5%) at local banks as well as maturity extensions on existing loans and deferment of interest payments will be available through all financial institutions beginning on April 1.► ON-SITE COMMUNICATION: Beginning on April 6, the FSC’s emergency financial situation room along with other relevant institutions will operate a regular on-site communication and inspection channel through conference calls or on-site visits in order to help resolve difficulties on the ground.► MARKET STABILIZATION FUNDS: On March 24, the size of the initial capital call has been decided at KRW3 trillion to launch a bond market stabilization fund, which will be expanded up to KRW20 trillion afterwards. The corporate bond purchase will start as early as April 2. A stock market stabilization fund in the amount of KRW760 billion was launched on March 25 by the Korea Exchange, the Korea Financial Investment Association, the Korea Securities Depository and the Korea Securities Finance Corp. In addition, KRW10 trillion more will be made available by the financial institutions in the private sector in the second week of April.► SHORT-TERM MONEY MARKETS: Between March 24 and 26, the Bank of Korea and the Korea Securities Finance Corp. made available approximately KRW3.5 trillion in short-term liquidity to the securities companies. On March 30, the policy banks will begin purchasing commercial paper, electronic short-term bonds and short-term credit bonds. A CP purchasing operation will be undertaken collectively by the Korea Development Bank and the Korea Credit Guarantee Fund.FINANCIAL SUPPORT PROVIDEDBetween February 7 and March 24, a total of KRW13.4 trillion (152,000 individual case
