DPM’s Presentation at the WEF and Meeting with Euroclear
DPM Presents on the Korean Economic Outlook at the WEF and Meets with Euroclear
In an effort to further attract foreign investment in Korea at the World Economic Forum (WEF) held in Davos, Switzerland on January 17-19, Deputy Prime Minister Kyungho CHOO gave a presentation on the Economic Outlook on the Republic of Korea to foreign investors and had bilateral talks with Lieve Mostrey, chief executive officer (CEO) of the Euroclear group, a major international central securities depository (ICSD), on the sideline of the forum.
DPM’s presentation on the Economic Outlook on the Republic of Korea
At a session on the Economic Outlook on the Republic of Korea co-hosted by the WEF on January 19, DPM CHOO explained Korea’s current economic situations and 2023 economic policy directions, followed by a Q&A session.
During his presentation, DPM CHOO stressed that Korea maintains robust fundamentals and has response capabilities to deal with challenging external conditions based on its economic feats including the ninth-largest foreign exchange (FX) reserves in the world, the highest-ever national credit rating, and forecast of the continued current account surpluses. He also explained that Korea’s economic policy directions are focusing on managing macroeconomic risks, making a shift toward the economy led by the private sector and markets, and implementing structural reforms and preparing for the future, with a view to overcoming current challenges and achieving economic rebound.
In particular, he highlighted the Korean government’s commitment to improving the Korean capital market by making it more foreign investor-friendly and in line with global standards starting from this year. To that end, the government will seek to abolish registration requirements for foreign investors, extend FX trading hours, introduce the New Foreign Exchange Transactions Act, which replaces the existing Act, in order to drastically ease the regulatory burden of FX transactions, and rapidly achieve Korea’s inclusion in the FTSE World Government Bond Index (WGBI).
Moreover, DPM CHOO noted that Korea will strive to tackle multi-faceted global challenges and emerge as one of the world’s leading countries with its built-in DNA of overcoming crises. This capacity has been well demonstrated in its outstanding recovery from several historic crises such as the 1997 Asian financial crisis, the 2008 financial crisis and the Covid-19 pandemic.
During the Q&A session, DPM CHOO answered questions asked by participants with keen interest in the Korean economy. Key Q&As are briefly summarized as follows.
Asked about the outlook of investment and financial cooperation between Korea and the United Arab Emirates (UAE) following the recent summit, DPM CHOO mentioned that the two governments will work together to generate tangible outcomes through consultations between the two countries’ public and private institutions, noting the significance of the UAE’s pledge to invest USD 30 billion in Korea.
As for the Korean government’s policy responses to low fertility and population aging and outlooks of related industries, DPM CHOO introduced various policies such as an increase in labor supply by attracting more foreign workers and the productivity improvement through labor and education reforms.
Regarding the outlook of Korea’s FX market, DPM CHOO responded that the Korean government will closely monitor neighboring countries’ FX markets as well as those of major countries, recognizing that the won-dollar exchange rates have recently become stable after undergoing volatility in the second half of 2022 due to the U.S. and other major economies’ stronger monetary tightening.
Bilateral talks with the CEO of the Euroclear group
Bilateral talks between DPM CHOO and Lieve Mostrey, CEO of the Euroclear group, took place on January 19.
DPM CHOO introduced the Korean government’s various efforts to improve the investment environment of KTBs (Korea treasury bonds) for foreign investors and plans to achieve Korea’s inclusion in the FTSE WGBI. He pointed out that the influx of foreign investments into KTBs will grow significantly if Korea succeeds to join the FTSE WGBI. For this reason, he requested the group’s support to swiftly implement its omnibus accounts for KTB investment prior to Korea’s inclusion into the WGBI.
Highly recognizing Korea’s recent efforts to revamp its related rules, the Euroclear CEO answered that the group will prioritize easier and faster access for international investors to the Korean market through Euroclear’s omnibus account system. She added that mindful of importance of ensuring the system’s technical perfection, the group will actively cooperate with related organizations including the Korean government and the Korea Securities Depository (KSD) to achieve the goal.
DPM CHOO expressed his gratitude to the group’s support and interest in the KTB market and hoped that 2023 becomes a year when bilateral cooperation between the Korean government and the Euroclear group will lead to mutually meaningful outcomes.
 Investors from Europe and the Middle East pre-registered attendance for this session through the WEF’s website.
 Its current account surpluses are estimated to be USD 25.0 billion in 2022 and projected to be around USD 20.0 billion in 2023.
 The UAE has decided a USD 30 billion investment in Korea’s strategic industries led by the UAE’s sovereign wealth funds during the Korea-UAE summit held on January 15.
 As the world’s largest ICSD, it signed an MOU on the implementation and operation of omnibus accounts for KTB investment with the Korea Securities Depository (KSD) in December 2022 and the preparation for launching this service is currently underway.
 According to a report by the Korea Institute of Finance in 2020, Korea’s joining the FTSE WGBI is projected to create 50-60 trillion won in foreign investment into the KTB market.
Please refer to the attached pdf.