Cabinet Approval of the National Debt Act Amendment Bill for Introducing Government Bonds for Individual Investors

Designated Korea Securities Depository as the Administrative Processing Agency

[Sejong=Asia Economy Reporter Kim Hyunjung] The partial amendment bill of the National Treasury Act for the new introduction of government bonds for individual investors was reviewed and approved at the Cabinet meeting on the 4th. While establishing the basis for issuing 'government bonds for individual investors,' the Korea Securities Depository was designated as the administrative agency.

This amendment bill began to be actively discussed from October last year as stable issuance of government bonds became important to support proactive fiscal policies, and the government aimed to diversify the demand base for government bonds to individuals. At that time, the introduction of 'government bonds for individual investors' with interest rate incentives was announced through the 'Measures to Strengthen the Government Bond Market Capability.'

The amendment established the basis for issuing 'government bonds for individual investors,' limiting the purchase eligibility to individuals, and unlike existing government bonds, it allowed issuance outside the open market at pre-announced interest rates through designated financial institutions.

The Korea Securities Depository was designated as the administrative agency for government bonds for individual investors, and obligations such as administrative reporting and data submission were stipulated. In addition, to prevent market disruption, transfer or circulation to others was restricted. However, inheritance and bequest are allowed, and early redemption against the government before maturity is possible. In the case of early redemption, incentives such as additional interest rates and tax benefits do not apply. To enhance familiarity with government bonds and for promotional purposes, small-denomination physical commemorative government bonds may also be issued if necessary.

An official from the Ministry of Economy and Finance stated, "Through the introduction of ‘government bonds for individual investors,’ which are activated in major overseas countries, it will be possible to expand the demand base of the government bond market and contribute to creating a favorable environment for stable government bond issuance," emphasizing, "It will newly provide a stable investment instrument for the long-term asset formation of individual citizens, and it is also expected to have the effect of incentivizing the use of abundant market liquidity in more productive sectors."

Meanwhile, the government plans to establish detailed guidelines (notices) related to government bonds for individual investors, specifying details such as the method of determining additional interest rates, issuance methods and timing, maturity structure, principal and interest payment methods, designation of sales institutions, and individual purchase limits. Tax benefits for government bonds for individual investors will be decided in the July tax law amendment bill, reflecting the results of the ongoing preliminary feasibility study on tax incentives.

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