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Republic of Korea: Financial Sector Assessment Program-Technical Note-Macroprudential Policy Frameworks and Tools

International Monetary Fund

No 2020/277, IMF Staff Country Reports from International Monetary Fund

Abstract: Past experience with financial crises places systemic risk oversight at the core of Korea’s approach to the financial system. The Korean authorities have amassed over a decade of experience with macroprudential policies. They have put in place rigorous and sophisticated processes for risk monitoring. They publish first-rate analysis. And they have actively developed measures to mitigate risks to the financial system—notably from FX exposures, and from household indebtedness—as circumstances have changed. But their system has evolved to be highly complex, which poses challenges for coordination, communication, and transparency; moreover, their toolkit needs to be extended. These areas should be the focus of efforts to strengthen the policy framework.

Keywords: ISCR; CR; carry trade; foreign currency; stabilization fund; stress test model; disincentivize bank; fixed interest rate; FX liability; monetary policy; financial system; foreign exchange market; exchange rate; Financial sector stability; Macroprudential policy; Macroprudential policy instruments; Systemic risk; Countercyclical capital buffers; Global (search for similar items in EconPapers)
Pages: 67
Date: 2020-09-18
New Economics Papers: this item is included in nep-mac
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