Republic of Korea : Financial Sector Assessment Program-Crisis Preparedness and Crisis Management Framework-Technical Note.

Format:

Book

Government document

Author/Creator:

International Monetary Fund. Monetary and Capital Markets Department.

Contributor:

International Monetary Fund, issuing body.

Series:

IMF Staff Country Reports; Country Report ; No. 2015/005

IMF Staff Country Reports

Language:

English

Subjects (All):

International Monetary Fund--Korea.

International Monetary Fund.

Crisis management--Economic aspects--Korea.

Crisis management.

Financial crises--Korea--Management.

Financial crises.

Financial risk management--Korea.

Financial risk management.

Crisis management--Economic aspects--Law and legislation--Korea.

Deposit insurance--Risk management--Korea.

Deposit insurance.

Banks and banking--State supervision--Korea.

Banks and banking.

Korea--Economic policy.

Korea.

Physical Description:

1 online resource (42 p.)

Place of Publication:

Washington, D.C. : International Monetary Fund, 2015.

Summary:

Korea experienced significant financial distress in the late 1990s along with some of its Asian neighbors. The authorities’ experience in handling this crisis and the experience in handling the fallout from the global financial crisis in 2007–08 helped them establish a broad crisis management framework in Korea. Improving and formalizing the framework for crisis management would help preserve and build upon institutional memory. Authorities can consider formally setting up an apex forum for leading the inter-agency cooperation and coordination work on crisis preparedness and crisis management. With a view to avoid duplication, the authorities may consider upgrading the Macroeconomic Financial Meeting (MEFM) with participation by the heads of the Ministry of Strategy and Finance (MOSF), Financial Services Commission (FSC), Financial Supervisory Service (FSS), Bank of Korea (BOK), and Korea Deposit Insurance Corporation (KDIC) as members, and by including crisis preparedness and crisis management as an explicit mandate. The essential elements of a financial safety net are available in Korea, and the Emergency Liquidity Assistance (ELA) framework and deposit insurance system can be improved to make the safety net more responsive. For ELA, this can be achieved by reviewing and revising the legal and procedural aspects to remove any scope for delays in actual disbursement of funds. For deposit insurance system, improvements can be made by bringing the deposit insurance fund out of deficit, and assuring a back-up funding. The financial safety net is well supported by an efficient framework of financial sector supervision. While the corrective action framework has some of the main elements in place it can, among others, be improved in the following areas for better effectiveness: (a) reviewing the triggers for corrective actions and improving their objectivity to enable timely intervention, including even before banks breach regulatory thresholds; and (b) putting in place norms and guidance determining the use of the powers to postpone or suspend corrective actions.

Contents:

Cover; Contents; Glossary; Preface; EXECUTIVE SUMMARY; TABLES; 1. Recommendations; INTRODUCTION; A. Past Experience in Crisis Management; B. Korean Financial System; BOXES; 1. Policy Measures Initiated in the Wake of the 2008 Global Ffinancial Crisis; LEGAL AND INSTITUTIONAL FRAMEWORK FOR CRISIS MANAGEMENT; A. The Framework; B. Interagency Cooperation and Coordination; 2. Interconnectedness of Authorities' Decision-Making Bodies; CRISIS PREPAREDNESS AND PREVENTION FRAMEWORK; A. Systemic Risk and Financial Stability Assessment; B. Financial Safety Net

3. Deposit Insurance Protection (at end-2012)4. Deposit Insurance Premium Rates per Financial Sector Segment; C. Supervisory Framework for Problem Banks; 5. Corrective Action Framework for Banks and Bank Holding Companies; D. Contingency Plans; 2. Contingency Planning in Korea; CRISIS MANAGEMENT FRAMEWORK; A. Systemic Liquidity in Money and Securities Markets; B. Deposit Insurance and Guarantee; C. Public Financial Support; 3. Use of Public Funds to Support the Financial System; FINANCIAL INSTITUTIONS RESOLUTION; A. Resolution Measures for Insolvent Banks; B. The Least Cost Principle

C. Systemic ImplicationsAPPENDIX I. FINANCIAL SYSTEM

Notes:

Description based upon print version of record.

Description based on online resource; title from PDF cover (ebrary, viewed March 2, 2015).

ISBN:

9781484387801

1484387805

9781498327794

1498327796