Hong Nam-ki: "Temporary Exemption of Foreign Currency Soundness Charges for Financial Companies... Announcement Within This Week" (Update)

[Asia Economy Reporter Jang Sehee] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated, "To ease the foreign currency borrowing costs of financial companies, we plan to announce specific measures within this week to temporarily exempt the foreign exchange soundness surcharge and temporarily ease the foreign currency LCR (Liquidity Coverage Ratio) regulatory burden."

Deputy Prime Minister Hong made these remarks on the 25th at the 12th Ministerial Meeting on Economic Response to COVID-19 and the 2nd Crisis Management Countermeasures Meeting.

Hong said, "We will actively support the private sector's efforts to raise foreign currency funds by easing the macroprudential regulatory measures in the foreign exchange sector, which were introduced after the 2008 financial crisis to prevent excessive foreign currency capital inflows and outflows, in accordance with the current situation." Previously, the government had raised the forward exchange position limit by 25%.

Hong mentioned, "Since the spread of the novel coronavirus infection (COVID-19) and the pandemic declaration, the global economy has slowed down, and the international financial market has shown significant volatility. Domestic financial markets, foreign exchange markets, and foreign currency funding markets have also been affected, increasing volatility."

He added, "Given that external soundness indicators such as foreign exchange reserves, net external claims, short-term external debt ratio, and bank foreign currency liquidity are clearly different from those during past financial and foreign exchange crises, excessive anxiety and overreaction to such concerns should be restrained." He further emphasized, "It is most important that the government, banks, and companies thoroughly prepare and take preemptive measures."

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