[2024 National Audit] Kim Byunghwan "YeBo, Need to Introduce Financial Stability Account"

Kim Byung-hwan, Chairman of the Financial Services Commission, expressed the view that the Korea Deposit Insurance Corporation (KDIC) needs to proactively provide funds to financial institutions temporarily facing liquidity crises.

On the 24th, during the National Assembly's Political Affairs Committee audit, in response to Rep. Yoo Dong-soo of the Democratic Party's question whether KDIC's proactive response to financial institutions at risk of insolvency contradicts its founding purpose, Chairman Kim replied, "When responding to crises, the Bank of Korea's liquidity support has various restrictions on non-bank institutions," adding, "It is necessary to have diverse means."

Regarding whether the current Korean financial market is unstable enough to introduce a Financial Stability Account, he said, "It is not such a situation now," but added, "I think it is necessary to introduce (the Financial Stability Account) when the market is stable."

The Financial Stability Account is a policy that uses funds within KDIC to proactively provide funds to financial institutions temporarily facing difficulties during liquidity crises. Financial authorities and KDIC have been persuading the National Assembly to introduce the Financial Stability Account, but some opposition party members have advocated caution.

Kim Byung-hwan, Chairman of the Financial Services Commission, is attending the comprehensive audit of the Financial Services Commission and the Financial Supervisory Service held at the National Assembly's Political Affairs Committee on the 24th. Photo by Kim Hyun-min

Rep. Yoo also stated during the audit that "KDIC should be responsible for post-facto measures to resolve insolvent financial institutions." He added, "Since the introduction of the target fund system, the reserve fund is only 41.6%. I think it is time for KDIC to focus on accumulating the target fund in line with its founding purpose."

The target fund system sets a pre-accumulation goal to ensure the reserve fund can cover losses, and once the reserve fund reaches the target, insurance premiums are reduced. KDIC has been implementing the target fund system since January 2009.

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