Government: "Saemaeul Geumgo Incident Calming Down... Establishing Intergovernmental Task Force to Strengthen System"

Capital and Liquidity Ratios Exceed Regulatory Limits
Full Coverage for Deposits Over 50 Million Won
Task Force Responds for Early Stabilization of the Situation

The government assessed on the 9th that the so-called 'Saemaeul Geumgo incident' has entered a stabilization phase. This is because the withdrawal tax on deposits has slowed down and the amount of re-deposits has increased. However, to ensure early response, the government decided to strengthen the response system by forming the 'Pan-Government Saemaeul Geumgo Task Support Team.'

On the morning of the same day, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho held an expanded macroeconomic and financial issues meeting at the Bankers Association Hall in Jung-gu, Seoul, together with Lee Chang-yong, Governor of the Bank of Korea, Kim Ju-hyun, Chairman of the Financial Services Commission, Han Chang-seop, Vice Minister of the Ministry of the Interior and Safety, Lee Bok-hyun, Governor of the Financial Supervisory Service, and Choi Sang-mok, Senior Secretary for Economic Affairs at the Presidential Office, to review trends in deposits and savings withdrawals related to Saemaeul Geumgo.

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho (third from left) is taking a commemorative photo with participants at the expanded macroeconomic and financial issues meeting held at the Bankers Association Building in Jung-gu, Seoul on the 9th. From the left: Choi Sang-mok, Senior Secretary for Economic Affairs to the President; Lee Chang-ryong, Governor of the Bank of Korea; Deputy Prime Minister Choo Kyung-ho; Han Chang-seop, Vice Minister of the Ministry of the Interior and Safety; Kim Ju-hyun, Chairman of the Financial Services Commission; Lee Bok-hyun, Governor of the Financial Supervisory Service. 2023.7.9 [Provided by the Ministry of Economy and Finance. Resale and DB prohibited] [Image source=Yonhap News]

The attendees evaluated that since the joint government briefing on the 6th, the scale and speed of withdrawals from Saemaeul Geumgo deposits and savings have slowed. They judged that anxiety is gradually calming down as the amount of deposits and the number of new subscriptions are increasing. In particular, if deposits and savings that were prematurely terminated between the 1st and 6th are re-deposited by the 14th, they will be restored with the same interest rate and tax-exempt benefits as the initial subscription conditions, so the amount of withdrawals is expected to decrease while the amount of re-deposits will continue to increase.

The attendees agreed that Saemaeul Geumgo’s capital ratio and liquidity ratio exceed regulatory ratios, and that it holds sufficient cash assets, indicating that soundness and liquidity are being properly managed. They also emphasized that Saemaeul Geumgo guarantees deposits under 50 million won, and in cases where there are concerns about the soundness of a specific Geumgo, assets and liabilities can be transferred to a sound Geumgo, ensuring full coverage of deposits exceeding 50 million won.

The government will continue the cooperative system to stabilize the situation early. The 'Pan-Government Saemaeul Geumgo Task Support Team,' co-led by the Ministry of the Interior and Safety’s Regional Economic Support Officer and the Financial Services Commission’s Financial Industry Bureau Director, will be launched from the 10th. The support team, composed of officials from the Ministry of the Interior and Safety, Financial Services Commission, Ministry of Economy and Finance, Bank of Korea, Financial Supervisory Service, and Korea Deposit Insurance Corporation, will be stationed at the Saemaeul Geumgo Central Association to jointly respond.

Saemaeul Geumgo can receive support through government borrowing if necessary according to the law. The Bank of Korea also announced plans to manage market liquidity to ensure that the Saemaeul Geumgo Central Association faces no difficulties in funding procurement in the market. The government urged, "It is not a rational choice for the public to give up contracted interest and tax-exempt benefits and bear losses from premature termination due to excessive anxiety. Please trust Saemaeul Geumgo as usual and maintain existing transaction relationships."

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