FSC clamps down on unsecured lending while bolstering Korean repo market

Reform to broaden the use of the onshore repo market in South Korea is expected to help smaller banks and financial institutions better manage their short-term funding and reduce systemic risk. It should also facilitate the development of interest rate derivatives.


South Korea's financial regulator plans to clamp down on unsecured short-term lending by financial institutions while at the same time introducing new rules aimed at boosting the volume of onshore won repurchase agreements (repos). The aim is to reduce credit risk in the financial system and help banks to improve their funding profiles from a risk perspective. In the longer term, it should also aid them in hedging their bond and interest rate derivatives positions.

The Financial Services

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