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Bank of Korea, 'emergency exchange-rate Monetary Policy Committee'…"Instead of entrusting dollars to the BOK, release them into the market"
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- The Bank of Korea said it will temporarily exempt financial institutions' foreign exchange soundness charge until June next year.
- It also said it decided to pay interest on financial institutions' excess foreign-currency deposit reserves until June next year.
- It said the measure is expected to increase foreign-currency supply and the domestic inflow of overseas investment assets.
- The article was summarized using an artificial intelligence-based language model.
- Due to the nature of the technology, key content in the text may be excluded or different from the facts.
The Bank of Korea decided to temporarily exempt the foreign exchange soundness charge that financial institutions must set aside at the BOK to manage the soundness of foreign-currency liabilities until June next year. The intent is to have them release dollars into the market instead of leaving them at the BOK. The BOK also decided to pay interest when financial institutions place excess foreign-currency deposit reserves at the BOK.
On the morning of the 19th, the Bank of Korea held an extraordinary Monetary Policy Committee meeting at its headquarters on Namdaemun-ro, Seoul, and adopted such measures. It is the first time in about a year that the BOK has held an extraordinary MPC since December 4 last year, the day after martial law.
The BOK decided to temporarily exempt, for six months from January through June next year, the foreign exchange soundness charge that financial institutions pay on non-deposit foreign-currency liabilities. The BOK said, "We expect that reducing financial institutions' burden of paying the foreign exchange soundness charge will expand incentives to supply foreign currency domestically to the foreign exchange market." It means to release foreign currency into the market instead of piling it up at the BOK.
It also decided to pay interest on financial institutions' reserve requirements to bring investment assets held overseas back into the country. This will also apply from January through June next year.
The target is the 'excess foreign-currency deposit reserves (for December this year to May next year)' deposited by financial institutions at the BOK. The BOK said, "This allows financial institutions to operate foreign-currency funds, which they mainly managed overseas, domestically with stable interest earnings relative to risk," and "We expect this to promote the domestic inflow of foreign-currency deposits managed overseas by non-financial institutions and individuals."
Reporter Kang Jin-gyu josep@hankyung.com
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