The FSC of South Korea released a statement on financial policy plans of the government for the second half of 2020. The statement covers key financial policy tasks in relation to the financial response to COVID-19 pandemic, tasks to promote innovation in financial services, and focus areas in post-pandemic economy. FSC Chairman Eun Sung-soo spoke about the crucial role of finance in a post COVID-19 economy at the Financial Development Review Committee meeting on June 11. He also delivered welcoming remarks during the opening session of the 2020 Korea Fintech Week. During this session, he mentioned that, as part of the government’s strategies to pursue innovation, FSC will continue to promote digital, big data, and untact services in the financial industry. FSC also unveiled the fifth three-year plan for financial hub policy (2020-2022) and released a statement providing an overview of its financial regulatory sandbox program, which has been operating since April 01, 2019.
The financial policy tasks for second half of 2020 include the following:
- Financial Response to COVID-19 Pandemic—FSC will continue to work on the provision of prompt support in response to COVID-19 pandemic through the KRW 175 trillion-plus financial assistance programs. The key industry stabilization fund launched on May 28 will be operational and begin to provide support in June. The KRW 10 trillion special purpose vehicle will be launched to provide support for purchasing low-rated corporate bonds and commercial paper as soon as the third supplementary budget is passed at the National Assembly. The government will also work on additional measures to improve the financing support for small and medium enterprises (SMEs).
- Promotion of Innovation in Financial Services—During the second half, FSC will redirect efforts at promoting innovation while also balancing the changes brought about by the pandemic. It is expected that the first 20 business areas will be selected within the next month by the relevant ministries, and the government plans to select 200 innovative businesses within this year. The government will work to provide more investment opportunities to more innovative firms, and provide comprehensive financial and consulting supports to selected firms. A special purpose vehicle launched by Korea Asset Management Corporation (KAMCO) will be fully operational at the end of June to facilitate movable asset backed lending and support the management and disposal of movable collateral.
- Key Tasks in Post-Pandemic Economy—The key focus areas in the post-pandemic economy include promoting digital finance, strengthening financial stability, and promoting inclusive finance. The government will work on digital risk management by requiring financial companies to establish internal control mechanisms to ensure that data privacy is thoroughly protected. FSC will also work to bolster foundations of financial stability by reviewing the necessity of extending or improving the temporary de-regulatory measures introduced in April, and maintaining its risk management to prepare for future uncertainties.
During his remarks on finance in the post-COVID economy, FSC Chairman highlighted that FSC introduced temporary easing of regulations in loan-to-deposit ratio and liquidity coverage ratio, among others. To minimize the resulting cost burdens for many stakeholders, sufficient policy discussions should take place prior to the reinstatement of regulations. He also stated that business credit rating system should move away from past-dependent model toward a future-oriented one, which will rate firms based on their future potential instead of past performances.
Additionally, the statement on financial regulatory sandbox highlights that, so far, FSC has designated 102 financial services as "innovative financial services" and 36 services among them are at the stage of market test, with 66 more expected to be launched in the first half this year. With the COVID-19 pandemic, the demand for untact and data- or platform-driven services has increased. FSC will continue to support the development of innovative financial services through its regulatory sandbox program.
- Financial Policy Tasks for Second Half of 2020 (PDF)
- Remarks by FSC Chairman on Role of Finance in Post-Pandemic Economy (PDF)
- Remarks by FSC Chairman During Korea Fintech Week (PDF)
- Fifth Plan for Financial Hub Policy (PDF)
- Overview of Financial Regulatory Sandbox (PDF)
Keywords: Asia Pacific, Korea, Banking, Securities, COVID-19, Fintech, Regulatory Sandbox, Big Data, Financial Hub Policy, Digital Finance, Innovative Financial Services, FSC
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