Ministry of Economy and Finance

The Ambassador for International Financial Cooperation Choi Jong-gu (former Chairman of the Financial Services Commission), visited Tokyo, Japan, from March 31st to April 1st. Ahead of Korea’s official inclusion in the World Government Bond Index (WGBI) this November, he briefed major Japanese investors on the foreign exchange (FX) and capital market reforms pursued by the Korean government and reviewed their evaluations and responses.   * World Government Bond Index (WGBI): A leading index that includes government bonds from 26 major countries. With an estimated $2.5 trillion in assets tracking this index, it is the largest global bond index.   First, Ambassador Choi met with the Chief Investment Officer (CIO) of Japan’s Government Pension Investment Fund (GPIF), the world’s largest pension fund and a major tracker of the WGBI. He provided a detailed explanation of Korea’s recent institutional reforms related to government bond investment, including the simplification of tax exemption procedures for government bonds, the introduction of an omnibus government bond account*, and the extension of FX trading hours. The GPIF described the speed and scope of the Korean government’s FX and capital market reforms as impressive, expressing its hope that these improvements would continue in the mid and long term. Both sides also agreed to maintain close communication to reflect the needs of Japanese investors in future regulatory enhancements.   * An omnibus system that allows asset management firms to process transactions collectively on behalf of sub-funds.   In addition, Ambassador Choi met with major investors, including the CEO of Mitsubishi UFJ Asset Management and the CIO of Resona Asset Management, to discuss Korea’s political and economic landscape as well as recent institutional reforms related to government bond investments. Japanese investors assessed that the recent regulatory improvements have significantly enhanced the environment for investing in Korean government bonds; if market openness continues to expand, they said they will increase their investments in Korea over the long term.   Ambassador Choi confirmed the positive response from Japanese investors regarding Korea’s efforts to improve its capital and FX market infrastructure during his visit to Japan. Leading up to Korea’s official inclusion in the WGBI this November, the government plans to maintain close communication with global investors, actively promote the regulatory improvements, and continuously monitor and refine the measures to ensure they function smoothly in practice without causing inconvenience to government bond investors. Please refer to the attached files.   

On April 3rd (Thursday), Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok held a Meeting on Macroeconomic and Financial issues at the Korea Federation of Banks Building, together with the Governor of the Bank of Korea, the Chairman of the Financial Services Commission, and the Governor of the Financial Supervisory Service. During the meeting, they reviewed financial and Foreign exchange (FX) market trends at home and abroad following the U.S. imposition of reciprocal tariffs (April 2nd, local time) and discussed future plans.     The following are key messages of DPM Choi’s remarks.   Early this morning, the U.S. government announced reciprocal tariff measures, setting a base tariff rate of 10%, and imposing country-specific rates of 25% for Korea, 24% for Japan, 20% for the EU, 34% for China, and 32% for Taiwan.   Following the announcement, global financial markets saw increased risk aversion, as evidenced by the appreciation of the U.S. dollar, a decline in U.S. Treasury yields, and a drop in stock futures indices.   The U.S. government’s reciprocal tariff measures are expected to sustain high volatility in global financial markets for the time being, with Korea’s financial and FX markets likely to react sensitively as well.   The Korean government has been thoroughly preparing contingency plans for increased financial and FX market volatility, primarily through the F4 meetings.   If market volatility expands excessively, the government will immediately implement all available market stabilization measures in accordance with the contingency plans.   In addition, a joint 24-hour monitoring system will remain in operation with relevant agencies until market conditions are sufficiently stabilized, while also operating sector-specific monitoring systems for the FX, government bond, and money markets.   Now that the high reciprocal tariffs have materialized, as discussed in the Emergency Ministerial Meeting on Trade chaired by the Acting President earlier, the government will now focus all its efforts on a full-scale support, with the F4 meetings playing an active role in this process.   First, based on a thorough analysis of U.S. tariff policies, government-wide endeavors will be focused on negotiations with the U.S. to minimize the impact on the Korean economy. Furthermore, through the Economic Security Strategy Task Force, the public and private sectors will work together to develop the best possible response strategies   Through the Ministerial Meeting on Strengthening Industrial Competitiveness, detailed support measures will be announced sequentially to respond to the reciprocal tariffs. These include industry-specific assistance for sectors expected to be affected, such as automobiles, and the expansion of refund guarantees (RG) for the shipbuilding industry.   The proposed 10 trillion KRW ‘essential supplementary budget’ will actively reflect projects aimed at addressing trade-related risks, including additional trade finance, expanded export voucher support, and the stabilization of supply chains for key items. The government earnestly request swift discussion to help Korean businesses navigate this unprecedented wave of trade challenges.   Moreover, the government will commit to using the changes in the global trade environment as an opportunity to strengthen Korea’s economic and industrial fundamentals.   Concerted policy efforts will be made to diversify Korean export markets by exploring new markets, enhance fundamental industrial competitiveness based on technology rather than price competition, and protect domestic jobs. Please refer to the attached files.

  On April 2nd (Wednesday), Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok convened the Ministerial Meeting on Economic Affairs at the Government Complex-Seoul.   The government will swiftly allocate resources to minimize the impact of the largest wildfire in Korean history on agricultural supply and prices in affected areas and to support the affected farmers. More than 400 billion KRW will be provided for facility and equipment restoration, feed purchases, and emergency livelihood stabilization funds. In addition, disaster recovery funds and relief grants will be disbursed immediately after the damage assessment is completed. The government plans to consider additional financial support to stabilize agricultural supply going forward.   Furthermore, as part of an effort to stabilize perceived prices, an additional 30 billion KRW will be injected into discount programs for agricultural, livestock, and fishery products in April and May; more than 100 tons of cabbage and radish will be supplied to the market daily for supply stabilization; public utility fees managed by government ministries, including electricity, gas, and railways, will be frozen in the first half of the year by absorbing cost increase factors through cost-cutting measures and self-help efforts; also, market monitoring will be strengthened to prevent unfair practices such as price hikes through capacity reductions and collusion.   The government will continue fostering innovative industries and supporting businesses; starting in May, a public-private joint ‘R&D Task Force’ will be launched to drive innovation-focused R&D in the animal pharmaceutical industry. All currently unimplemented items in international standard manufacturing and quality management regulations will be gradually adopted by 2035. Also, in order to make it easier for small business owners and SMEs to access policy financing, the ‘Integrated Policy Finance Platform’ will be launched on April 4th.   At today’s meeting, discussions were made on the ‘Consumer Price Index for March 2025 and Key Features’, ‘Progress on Improving the Distribution Structure of Agricultural and Fishery Products’, ‘Enhancing Market Monitoring and Institutional Improvements in Consumer-Critical Sectors’, ‘Support Measures for Farmers in Wildfire-Affected Areas’, ‘Development Plans for the Animal Pharmaceutical Industry’, and ‘Progress and Future Plans for the Integrated Policy Finance Platform’. Please refer to the attached files.