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Regulator to prioritize financial risk control in 2017

All News 12:00 February 07, 2017

SEOUL, Feb. 7 (Yonhap) -- South Korea's state financial watchdog said Tuesday its priority this year is to reinforce readiness to cope with U.S. interest rate increases, the possible impact from North Korean nuclear threats and other emergency situations.

The Financial Supervisory Service (FSS) will immediately shift to a 24-hour emergency response mode if necessary and put "contingency plans" into operation.

Announcing its 2017 policy direction, the FSS placed a "pre-emptive response to risk factors" in the financial market at the top of the list.

The authorities have introduced the foreign exchange liquidity coverage ratio (LCR) for local banks. They will be required to raise the LCR to at least 80 percent by 2019.

"To secure the stability of the foreign exchange market, we will faithfully implement the FX LCR system," the FSS said.

The logo of the Financial Supervisory Service (Yonhap)

Foreign exchange LCR is used as an index for monitoring domestic banks' readiness for a potential financial crisis.

The FSS will also improve a stress test for financial services firms here by diversifying relevant scenarios and making use of big data.

Among other key policies are curbing the household debt problem and helping facilitate corporate restructuring.

In addition, the FSS plans to tighten the monitoring of accounting-related malpractices and step up efforts to improve its regulatory works to meet global standards especially as the new International Financial Reporting Standards (IFRS) 17 for insurers here is scheduled to take effect in 2021.


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