FSC Chairman’s two-day on-site tour to promote technology finance and microfinance – part 2

On his second day of the two-day onsite tour, Chairman Shin Je-Yoon visited Jeonbuk University and Morene traditional market on Thursday.


At Jeonbuk University Business Incubator Center, Mr. Shin met business entrepreneurs to promote government’s efforts to support business start-ups and young entrepreneurs. In particular, he emphasized that the government would provide financial assistance, consulting services, and business data throughout the whole business cycle of a start-up company.


He added that the opinions raised during the meeting will be reflected when devising policies. Moreover, various policies will be prepared to encourage young entrepreneurs who are expected to become the key players to realize ‘creative finance.’

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Following the meaningful gathering in Jeonbuk University, Chairman Shin and the heads of financial corporations visited Morene traditional market located in Jeonju on the occasion of Chuseok holidays. He met with the local merchants to listen to hardships they are experiencing and various suggestions to be made on microfinancial policies. The government will continue to improve microfinancial policies that can actually do good to the merchants since traditional markets and mom-and-pop stores form the backbone of the Korean economy.

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The government will come up with a plan to improve the structure of microfinancial support in a more consumer-oriented direction in a near future based on the opinions gathered during the on-site tour.

FSC Chairman’s two-day on-site tour to promote technology finance and microfinance – part 1

The FSC has been committed to facilitate technology finance by establishing technology assessment systems such as Tech Credit Bureau(TCB) and Tech Data Base(DB). This time, Chairman Shin Je-Yoon set off for a two-day on-site tour to actually meet and listen to entrepreneurs of start-up companies and those related to technology finance.


For a starter, Chairman Shin visited Pan-gyo Techno Valley, Korea’s Silicon Valley where promising technology firms are located, to share various opinions about ways to promote technology finance. Suggestions and ideas raised during the tour will be reflected on the government’s future directions for technology finance.


Tomorrow, Mr. Shin will visit Jeonju University’s Business Incubator Center, Jeonju Morene traditional market, and Cheonan Employment Welfare Center.

Vice governor of the FSS, and heads of financial corporations such as Korea Development Bank, Korea Finance Corporation, Industrial Bank of Korea, and Export & Import Bank accompanied Chairman Shin during the tour.


Action Plan to Promote ‘Creative Finance’


The FSC announced its ‘Action plan to Promote Creative Finance’ on August 26, 2014. The plan comprises of three key tasks: 1)facilitate technology finance to reach out to lenders and businesses announced; 2)foster venture capital markets to finance start-ups and venture businesses; and 3)cultivate innovation-friendly culture in the financial sector.

A review committee will be formed in September to review and evaluate the progress on a continuous basis. The action plan will go into force immediately.

Please read the press release for more details -> http://www.fsc.go.kr/downManager?bbsid=BBS0048&no=92506

Weekly Global Financial News (Aug 18-Aug 25)


Jackson Hole Theme: Labor Markets Can’t Take Higher Rates, By Bloomberg, Published: Aug 25


Global central bankers led by Federal Reserve Chair Janet Yellen said stronger hiring and wages are still needed before economies can weather higher interest rates.

Promise of more keeps investors hooked on Asia’s frothy markets, By Reuters, Published: Aug 18


While other regions have cooled off, Asia has remained the exception as global investors are still betting on a mix of healthy returns powered by brisk corporate earnings growth.

China to launch market-making system on Beijing OTC market on August 25, By Reuters, Published: Aug 18


China will implement a market-making system for trading shares on the exchange, securing an easy profit from the spread between bids and asks.

Draghi Signals ECB Action as Inflation Expectations Slide, By Bloomberg, Published: Aug 23


Mario Draghi said inflation expectations have deteriorated across the euro area and signaled policy makers are ready to add fresh monetary stimulus.

Kuroda Says Using Foreigners to Fill Job Gaps Worth Considering, By Bloomberg, Published: Aug 24


Bank of Japan Governor Haruhiko Kuroda said that using foreign workers to help mitigate potential labor force shortages in the future deserves consideration in addition to ensuring increased particiapation of women and the elderly n the work force.

Korea’s Biggest Fund Manager Sees One More BOK Rate Cut: Economy, By Bloomberg, Published: Aug 25


South Korea’s central bank is likely to cut its benchmark interest rate to 2 percent, after lowering it to 2.25 percent from 2.50 percent on Aug 14, in order to help revive the economy

Shop online conveniently without public key certificate

Hello, readers! Have you ever bought things online in Korea? If so, you might have experienced some inconveniences with the payment system at least once. The so called ‘public key certificate’ has been the culprit that complicates the online payment. The public key certificate can be referred to as a cyber ID that verifies the user’s identification. It is so widely used in various electronic financial transactions in Korea that sometimes payment cannot be made without it. With fourteen years of history, it has settled as Korea’s main electronic transaction system and contributed a lot to the development of Korea’s online commerce. However, it has revealed some serious problems which brought about the debate whether to abolish it.

The public key certificate is vulnerable to cyber security because it is stored in particular folder called NPKI and uses “Active X” platform. Having one particular folder named NPKI, all the public key certificate holders are exposed to hackers who try to steal the cyber ID. Also, the public key certificate system is based on Active-X platform since its introduction which is now turned out to be insecure and has been replaced with other platforms. Active X is very vulnerable to malicious codes but Korean online consumers cannot switch to another platform since we need Active X to make payments. Adding to Active X platform problem, online shoppers are confined to a single web-browser, Microsoft Internet Explorer since other web-browsers do not support Active X. The reason why Korea is being ranked as one of the heaviest Internet Explorer users is because Korean online commerce requires the public key certificate which is based on Active X and Internet Explorer is the only browser that supports it.

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But now? The problems related to Active X platform, Internet Explorer, and the public key certificate are on the verge of becoming things of the past. Korea’s consumers might have been accustomed to inconvenient online payment methods but foreign consumers are not. To encourage more foreign consumers and to simplify the online payment system, the Financial Services Commission abolished requirements for the use of public key certificate in May. Moreover, the Ministry of Trade, Industry & Energy established an online shopping mall for foreigners only named ‘Kmall24’ to help foreigners easily buy products without Active X. But still, domestic online consumers were having difficulties with online payment system because credit card companies or online shopping malls still required the public key certificate due to security issue. To simplify online payment procedures, the FSC with other relevant government bodies established an improvement plan.

First, as mentioned above, foreigners can shop at foreigner-only shopping malls which don’t require the public key certificate and Active X. Large online shopping malls opened their own foreigner-only online shops whereas small and medium sized ones sell their products through Kmall24. Foreigners can shop more conveniently and domestic sellers can broaden their customer base.

Second, replacement technology for the public key certificate is under development. Up to now, the public key certificate could only be issued by government authorities but online shoppers can adopt various payment technologies only the payment system meets security technology conditions. Moreover, when making payments worth more than 50 dollars, a free text message will be sent to the customer to confirm the order.


Third, simple online payment services will be introduced. PG(Payment Gateway) companies, which are online application service providers that authorize credit card payments for electronic businesses, are trying to forge a partnership with credit card companies and use their information to establish one-click payment service like Paypal. However the government will strengthen regulatory scrutiny on those PG companies to protect customer information.

Fourth, domestic Internet environment will be improved. Since Active X is not a standard technology, it hinders foreign users to access domestic services. However, we cannot throw public key certificate away all at once. Non-Acvice X-based public key certificate will be developed and introduced. Also, experts are trying to adopt global standard HTML5 in Korea.

Improving the public key certificate, promotion of simple online payment service, and development of various authentication methods are the efforts that are expected to improve Korea’s e-commerce environment in general.

KoFIU & SAFIU sign MOU on money laundering prevention


Korea Financial Intelligence Unit(KoFIU) and the Saudi Arabian counterpart signed a MOU for cooperation on anti-money laundering on August 11. Upon signing of the agreement, KoFIU will share and pass on its experiences and know-hows about establishing system for prevention of money laundering. Six officials including Nasser Al-omair, head of Saudi Arabia FIU participated in a two-day workshop held in Korea to learn financial intelligence analysis methods, financial IT system, and anti-money laundering techniques.

KoFIU will further develop a program to share its knowledge and experience on money laundering prevention with countries of the Asia-Pacific region.

Good news for home buyers

Hello, readers! How are things going on with you? Well, it’s hard to hear fine in today’s depressed economy. Above all, the Korean housing market is showing no sign of picking up soon. People prefer Jeonse which made Jeonse price skyrocketed to almost the same level as buying a house. However, the real estate transaction as well as house price has been decreased, which seem quite ironic in that people choose not to buy a house though the price fell. This is because there’s underlying anxiety among people that house price would fall further. Korean housing market is now in deep freeze. To revive the housing sector, the Financial Services Commission (FSC) and Ministry of Strategy and Finance have decided to ease regulations on the amount of loans for home buyers based on the market value of the house and their income; those regulations are called LTV (Loan-to-Value) and DTI (Debt-to-Income)

Basically, LTV and DTI are both regulations on loan for home buyers. LTV ratio refers to the amount of loans one can borrow based on market value of the house. DTI ratio refers to the amount of loans one can borrow based on income. Both regulations set the upper limit on the amount that people can borrow from banks when buying a house. They were first introduced in 2002 to cool down the real estate overheat but now it’s used for the opposite purpose. Starting from 1 August 2014, LTV and DTI ratio were increased to 70 and 60 percent respectively and applied uniformly irrespective of the city, rural areas, banks and non-banking institutions. With these eased regulations, people can buy a house easier than before because now they don’t have to turn to non-banking institutions that charge them high interest rates.


What is good about LTV and DTI easing? First, it bolsters housing sector. Korean housing market has been brought to a standstill after series of economic downturns. People hesitate to buy a house for multiple reasons but there must be some people who want to buy a house and short of money. LTV and DTI easing would support those in financial need and contribute to real estate market revitalization. Secondly, it helps improve housing debt structure. Korea’s household debt has been growing faster than ever and peaked over 1,000 trillion won, which poses a serious threat to the Korean economy. If I were a person who wants to buy a house and short of money but cannot borrow more from banks due to LTV and DTI regulation, I had to turn to non-banking institutions and borrow at much higher interest rates. This high-interest borrowing exacerbates housing debt, which makes it bigger in absolute volume. LTV and DTI easing would definitely help prevent housing debt from getting bigger in size. However, many of you might have noticed that LTV and DTI easing does not really decrease the household debt itself.

So the critics have pointed out that loosening the loan regulation can only be a temporary measure. It cannot be a fundamental solution for growing household debt. Also, some criticize that falling house price is not a bad signal but rather a normal thing for real estate market seeking to find adequate level. Though there’s different viewpoints and opinions, loan regulation was already eased a week ago and what we can do now is to hope for the best. According to minister Seo Seung Hwan of Land, Infrastructure and Transport, real estate market is already sending good signal in response to LTV and DTI easing. Effects are still remain to be seen.