Emergency Fund of '100 Trillion Won + α' Injected to Support COVID-19 Damage

Measures for 'Crisis Containment' to Minimize the Ripple Effects of COVID-19
Ensuring Sufficient Liquidity Supply to the Corporate Sector Until the End of the Crisis
Establishing Stability Tools to Buffer Financial Market Shocks

Eun Sung-soo, Chairman of the Financial Services Commission, is explaining the 'Measures to Stabilize the Financial Market Related to COVID-19' at the Government Seoul Office Joint Briefing Room on the 24th.

[Asia Economy Reporter Kangwook Cho] The government will inject an emergency fund of '100 trillion won + α' to resolve financial difficulties caused by the spread of the novel coronavirus infection (COVID-19) and to maintain firm stability in the financial market. This amount has been doubled from the support scale announced at the 1st Emergency Economic Meeting. The support targets have also been expanded from self-employed and small and medium-sized enterprises (SMEs) to include medium-sized and large enterprises.

On the 24th, Eun Sung-soo, Chairman of the Financial Services Commission, held a briefing after the 2nd Emergency Economic Meeting chaired by President Moon Jae-in, stating, "In this 2nd meeting, we discussed the 'Financial Market Stabilization Plan' by boldly increasing the support scale to 100 trillion won + α, expanding the support targets to medium-sized and large enterprises, and specifying financial market stabilization measures."

According to this plan, the supply scale of policy finance to the vulnerable real sector will be expanded to 58.3 trillion won. This includes 29.2 trillion won for financial support to SMEs and small business owners announced at the 1st Emergency Economic Meeting on the 19th, and 29.1 trillion won for funding support to SMEs and medium-sized enterprises.

Among this, 21.2 trillion won (Korea Development Bank 5.0 trillion won + Industrial Bank of Korea 10.0 trillion won + Export-Import Bank of Korea 6.2 trillion won) will be provided as special loans, and large enterprises will be included if necessary. Additionally, the remaining 7.9 trillion won (Korea Credit Guarantee Fund 5.4 trillion won + Export-Import Bank of Korea 2.5 trillion won) will be supplied as guarantees for credit-vulnerable SMEs and medium-sized enterprises.

A fund and capital totaling 41.8 trillion won will be prepared to respond to instability factors in financial markets such as the stock market, corporate bond market, and short-term money market.

In particular, a 20 trillion won Bond Market Stabilization Fund will be operated to support market stability and prevent market anxiety from spreading to the tightening of the corporate bond market and others. The financial authorities will initially operate a 10 trillion won fund and quickly raise an additional 10 trillion won to start operations. This fund will begin active purchases early next month after internal procedures within the financial sector.

To facilitate smooth corporate bond issuance, 4.1 trillion won of policy finance will be supported. This is to supplement the market-based borrowing needs of companies facing temporary liquidity crunches with policy finance support.

7 trillion won will be provided to stabilize the short-term money market, including commercial paper (CP). The financial authorities have decided to proactively provide liquidity support to quickly alleviate some instability factors in short-term money markets such as CP and electronic short-term bonds.

A Securities Market Stabilization Fund based on voluntary participation from the financial sector will be established. Five major financial holding companies, 18 financial companies from each sector, and securities-related institutions such as exchanges will raise 10.7 trillion won and begin full operation early next month.

Additionally, plans are underway to enable stock investment through ISA and to expand the subscription target from income earners to residents, along with tax support measures.

The financial authorities plan to execute this plan as swiftly as possible to maximize market stabilization effects and to institutionally support proper execution at frontline windows.

Chairman Eun emphasized, "We will build a dense financial support network to prevent the spread of market anxiety," and added, "As this is a nationwide crisis response plan, we will implement it based on communication and cooperation among economic agents."

This content was produced with the assistance of AI translation services.