"Expand the Scope of Trustable Assets... Need to Revitalize Comprehensive Property Trusts"

Financial Services Commission Hosts Future Response Finance Task Force Meeting

Yonhap News

A policy proposal has been made to activate customized trust products such as comprehensive property trusts and testamentary substitute trusts, and to expand the scope of trustable assets. This points to the need to enhance the flexibility of the trust system amid increasing demand for asset management in an aging society.

On the 28th, the Financial Services Commission held the 'Future Response Finance TF (Task Force)' at the Seoul Banking Hall and announced policy tasks proposed on this matter. The TF included related organizations such as the Financial Services Commission and the Bank of Korea, financial sector federations and associations like the Korea Federation of Banks, as well as academia and research institutions. Since its launch in April, the TF has analyzed the impact of future change factors such as demographic shifts, climate change, and technological innovation on financial markets and industries through sub-TFs, and discussed medium- to long-term response directions in the financial sector.

The TF actively encouraged the activation of customized trust products such as comprehensive property trusts and testamentary substitute trusts, emphasized the importance of efforts to support innovation in the financial industry including deregulation related to financial companies’ entry into care services, and the promotion of internationalization of the financial industry.

In particular, comprehensive property trusts are essential financial products in an aging society as they allow integrated management of various assets such as deposits, real estate, and stocks. They enable customized asset management tailored to individual circumstances and needs, helping elderly people plan a stable retirement. However, according to 2022 data from the Financial Services Commission, the share of comprehensive property trusts in Korea’s trust assets is only 600 billion KRW, accounting for 0.04%. Most assets are concentrated in money trusts designed for financial products (570 trillion KRW, 50%) and real estate trusts (403 trillion KRW, 35%). Activating comprehensive property trusts is considered an important task for the development of the financial industry through diversification of the trust industry.

New technology fields such as AI (artificial intelligence), digital assets, P2P, and DeFi (decentralized finance) were also discussed. To reliably utilize rapidly evolving technological innovations in finance, it was mentioned that regulators and the industry need to continuously strive for stable institutionalization, and that resilience to unpredictable risks is important. A consensus was formed on the need to proactively respond to changes in the financial system due to accelerated digital transformation.

From the climate perspective, discussions included establishing green loan management guidelines, strengthening efforts to measure and manage financial emissions to lay the foundation for activating climate finance, and the need for financial companies to manage climate change risks through climate change stress testing.

A Financial Services Commission official said, "As future uncertainties increase and the pace of change accelerates, the government has been pushing forward with tasks that can be prioritized this year," and added, "It is necessary to continue policy deliberations so that future changes can be used as opportunities for growth and innovation, enabling finance to take a leap forward."

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