Macroprudential frameworks, implementation and relationship with other policies in Korea

Ho Soon Shin, Jung Yeoun Lee, Jungmin Park
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Ho Soon Shin, Jung Yeoun Lee, Jungmin Park: Bank for International Settlements

A chapter in Macroprudential frameworks, implementation and relationship with other policies, 2017, vol. 94, pp 219-229 from Bank for International Settlements

Abstract: In Korea, the authorities responsible for financial stability carry out their respective roles under their individual purviews. Macroprudential (financial stability) policy is conducted by sharing views about financial stability conditions and responding jointly in times of crisis through various channels for cooperation. The macroprudential policy instruments currently used in Korea include loan-to-value and debt-to-income regulations, countercyclical capital buffers, regulation of the domestic currency loan-to-deposit ratio (LDR), and FX-related macroprudential measures (the Macro-prudential Stability Levy and leverage caps on banks‘ FX derivatives positions). The Bank of Korea (BOK) was given responsibility for financial stability under the revised Bank of Korea Act (which took effect in 2011). To this end, the Bank pre-emptively identifies potential risks in the financial system while conducting its monetary policy, as well as through its Financial Stability Report and Financial Stability Meetings. The BOK also shares its perceptions of financial conditions and responds jointly with the relevant government agencies at a macroprudential level.

Date: 2017
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