The Bank of Korea Includes 'Covered Bonds' as Eligible Collateral for Loans

Bank of Korea. [Photo by Joint Press Corps]

The Bank of Korea announced that the Monetary Policy Committee resolved on the 13th to include covered bonds with dual recourse claims as collateral securities for the Bank of Korea's loans and settlement execution.

Following the expansion of eligible collateral to include bonds issued by public institutions, local government bonds, bank bonds, and high-quality corporate bonds through the loan system reform in July last year, the Bank of Korea has newly incorporated covered bonds this time.

The expansion of eligible collateral securities for Bank of Korea loans enhances the Bank's capacity to supply liquidity to banks when necessary, thereby strengthening its financial stability function.

The Bank of Korea expects that if this measure activates the covered bond market, it will also help improve the qualitative structure of household debt.

The implementation date is September 2.

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