April 27, 2024
Finance
FSC approves new FX liquidity rule for banks
[THE INVESTOR] South Korea’s financial regulator on Nov. 30 gave its nod to introduce strict regulations on local banks’ foreign exchange liquidity.
Under the measure, banks will be held at least 80 percent of the expected amount of net foreign-currency outflows for a month.
South Korea has already used the liquidity coverage ratio published by the members of the Bank for International Settlements for its lenders. But it has been a only recommendation so far.
The country’s Finance Ministry announced in June that it would make the rule mandatory. The Financial Services Commission then agreed on the policy in a related committee session held on Nov.30.
Most banks will be required to maintain the LCR at 60 percent or higher starting on Jan. 1 next year, followed by at least 70 percent in 2018 and 80 percent beginning in 2019.
Domestic banks with less than US$500 million in foreign currency debt, which is less than 0.5 percent of total debt, and foreign bank branches here will be exempt from the regulation.
The FSC added that it will remove all other “small” regulations on the foreign exchange liquidity of local banks.
(theinvestor@heraldcorp.com)
Under the measure, banks will be held at least 80 percent of the expected amount of net foreign-currency outflows for a month.
South Korea has already used the liquidity coverage ratio published by the members of the Bank for International Settlements for its lenders. But it has been a only recommendation so far.
The country’s Finance Ministry announced in June that it would make the rule mandatory. The Financial Services Commission then agreed on the policy in a related committee session held on Nov.30.
Most banks will be required to maintain the LCR at 60 percent or higher starting on Jan. 1 next year, followed by at least 70 percent in 2018 and 80 percent beginning in 2019.
Domestic banks with less than US$500 million in foreign currency debt, which is less than 0.5 percent of total debt, and foreign bank branches here will be exempt from the regulation.
The FSC added that it will remove all other “small” regulations on the foreign exchange liquidity of local banks.
(theinvestor@heraldcorp.com)
