On May 12, Deputy Prime Minister and Minister of Finance and Economy Koo Yun Cheol chaired a meeting on foreign exchange (FX) market reforms at the Government Complex-Seoul, attended by senior executives and representatives of major domestic banks and branches of foreign banks. The meeting was convened to review banks’ preparations and hear about any difficulties they may face ahead of the full implementation of key FX market reform measures, including 24-hour FX market trading in July and the launch of the offshore Korean won settlement system in January next year.

^* Participating institutions: the Bank of Korea, KB Kookmin Bank, Shinhan Bank, Woori Bank, Hana Bank, Citibank, and HSBC.

DPM Koo stated that “the introduction of 24-hour FX market trading and offshore Korean won settlement represents a landmark measure that fundamentally reforms the framework of Korea’s FX system maintained since the 1997 Asian Financial Crisis.” He emphasized that these measures would “enhance global investors’ accessibility and convenience in Korea’s FX and capital markets to the level of advanced markets and open a new chapter in the internationalization of the Korean won.”

In particular, DPM Koo noted that the introduction of 24-hour FX market trading and offshore Korean won settlement is intended to modernize Korea’s FX market system in line with country’s upgraded economic stature – reflected in enhanced industrial competitiveness, the inclusion of Korean government bonds in the World Government Bond Index (WGBI), and strengthened external soundness – and to meet the needs of global investors seeking to invest in Korea’s economy and financial markets. He also stressed that these measures would broaden and deepen the FX market while creating new business opportunities for Korean financial institutions.

The participants shared the view that the FX market reform measures were necessary and noted that not only existing clients, such as foreign investors and import-export companies, but also new and potential clients who had not previously invested in the Korean market had been making inquiries about the details of the reforms. They added that the reforms had generated strong domestic and international interest and were expected to produce positive effects.

The participants also agreed to maintain close communication with the government going forward, as banks would need to adjust their internal staffing, business processes, and IT systems in line with the specific institutional reform measures.

Lastly, DPM Koo once again called on the participating banks to make every effort to ensure the smooth implementation and successful settlement of institutional reform measures through the allocation of sufficient human and material resources and the development of IT systems.

Please refer to the attached files.