Hong Nam-ki, Deputy Prime Minister, Announces Introduction of Foreign Currency Liquidity Monitoring Indicators for Non-Bank Sector

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is delivering opening remarks at the '27th Emergency Economic Central Countermeasures Headquarters Meeting' held on the 20th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

[Sejong=Asia Economy Reporter Kim Hyunjung] On the 20th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, announced that a foreign currency liquidity monitoring indicator will be introduced for non-bank financial companies.

Deputy Prime Minister Hong chaired the Central Emergency Economic Countermeasures Headquarters meeting at the Government Seoul Office and stated, "We have prepared a foreign currency liquidity management plan focusing on the non-bank sector, which was a blind spot in foreign exchange soundness policies."

He mentioned three types of monitoring indicators: the 'foreign currency funding-usage' indicator, the 'foreign currency asset-liability gap' indicator, and the 'foreign currency funding-operation maturity' indicator, and announced their introduction.

Deputy Prime Minister Hong said, "We will encourage financial companies to establish 'internal risk management standards' to strengthen their foreign exchange risk response capabilities and expand the scope of stress tests (latent vulnerability assessments). We plan to supplement the shortcomings of the existing foreign exchange soundness system by improving foreign currency liquidity ratio regulations reflecting the characteristics of the non-bank sector, and to support a multilayered foreign currency liquidity supply system that includes securities companies and insurance companies, not just banks, in case of emergencies."

He also emphasized, "Concerns about the real-financial gap and vulnerabilities in the foreign exchange sector of the non-bank sector could emerge as unexpected risks. Therefore, this year, we must focus on creating channels for market liquidity to be invested in productive areas and strengthening risk management."

Additionally, he announced this year's policy finance execution plan amounting to approximately 500 trillion won. He explained, "This year, policy finance will focus on three major areas: COVID-19 affected sectors, the Korean New Deal sectors, and industrial competitiveness enhancement," detailing ▲302 trillion won in financial support for small business owners and small and medium-sized enterprises ▲17.5 trillion won +α for New Deal projects such as special on-landing for New Deal companies and K-New Deal global promotion ▲and 101.6 trillion won for strengthening industrial competitiveness.

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