Due to Funding Shortage from Legoland... Government Expands Liquidity Supply by '50 Trillion+α'

Extraordinary Macroeconomic and Financial Meeting with Choo Kyung-ho and Lee Chang-yong Held

On the 23rd, Lee Bok-hyun, Governor of the Financial Supervisory Service, Lee Chang-yong, Governor of the Bank of Korea, Choo Kyung-ho, Deputy Prime Minister for Economy, Kim Joo-hyun, Chairman of the Financial Services Commission, and Choi Sang-mok, Senior Secretary for Economic Affairs, posed before the start of the 'Emergency Macroeconomic and Financial Meeting' held at the Bankers Hall in Jung-gu, Seoul. Photo by Yoon Dong-joo doso7@

The government has decided to expand its liquidity supply program to a scale of "50 trillion won plus alpha (+α)" to resolve the financial market instability triggered by the recent non-repayment incident of asset-backed commercial paper (ABCP) related to Legoland in Gangwon Province.

On the 23rd, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho held an emergency macroeconomic and financial meeting at the Bankers' Hall in Seoul with Lee Chang-yong, Governor of the Bank of Korea; Kim Ju-hyun, Chairman of the Financial Services Commission; Lee Bok-hyun, Governor of the Financial Supervisory Service; and Choi Sang-mok, Chief Secretary for Economic Affairs at the Presidential Office, announcing this plan.

Deputy Prime Minister Choo stated, "To prevent the spread of anxiety in the corporate bond market and short-term financial markets and to avoid liquidity contraction, we will expand and operate the existing market stabilization measures by increasing the liquidity supply program to a scale of 50 trillion won plus alpha."

Among this, the 20 trillion won-scale Bond Market Stabilization Fund will first utilize available resources of 1.6 trillion won to resume purchases of corporate bonds and commercial papers (CP), including construction company-guaranteed project financing (PF)-ABCP, starting from the 24th.

Additionally, the capital call process for additional fund requests will be accelerated to enable full-scale execution from early next month, and further fund raising will be pursued if necessary.

Deputy Prime Minister Choo said, "We will double the purchase limit of the corporate bond and CP purchase program operated by the Korea Development Bank, Industrial Bank of Korea, and Korea Credit Guarantee Fund from the existing 8 trillion won to 16 trillion won, and by including CPs issued by securities companies and other financial firms as purchase targets, we will stabilize market anxiety related to real estate PF-ABCP."

Furthermore, for securities companies temporarily facing liquidity shortages due to difficulties in refinancing PF-ABCP, Korea Securities Finance Corporation will first utilize its own resources to provide liquidity support of approximately 3 trillion won.

The Bank of Korea plans to promptly review at the Monetary Policy Committee the inclusion of public institution bonds and bank bonds, in addition to government bonds, as eligible collateral securities for loans to support such liquidity assistance.

Deputy Prime Minister Choo added, "As announced today by the Ministry of the Interior and Safety, all local governments will faithfully fulfill their payment guarantee obligations for local government-guaranteed ABCP. Furthermore, to support refinancing for normal project progress and to alleviate difficulties in PF funding, we will expand the business guarantee support of the Housing and Urban Guarantee Corporation (HUG) and the Korea Housing Finance Corporation to a scale of 10 trillion won, and promptly prepare specific support measures for the overall PF market, including regulatory easing to prevent unsold housing."

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