KOREA CAPITAL MARKET INSTITUTE

The money market is a market place where financial institutions exchange short-term liquidity, playing a crucial role in the stability of the whole financial system. Since the 2008 global financial crisis, major developed countries have concentrated their policy efforts on improving stability and transparency of the money market. For example, the US and Europe are trying to rein in financial institutions’ excessive short-term transactions. Especially, regulators have tightened regulation governing the way short-term financial transaction information is collected and disclosed, and the process of benchmark interest rate calculation with the aim to enhance market transparency and confidence. 

Since the global financial crisis, Korea’s money market has achieved substantial changes including the immense growth of the repo market and the penetration of short-term electronic bonds, thanks to the government’s ceaseless market reforms and market participants’ efforts. However, the market still has no established, integrated regulatory framework that could govern the overall money market. To address this issue, a government-led task force has been in operation to take action for the government’s money market facilitation plan since 2016. The TF has focused on active discussions on the enactment of the money market bill seeking to enhance the stability and transparency of the money market. The bill at issue is well in line with the global regulatory trend toward tougher money market regulation, expected to contribute greatly to the qualitative growth in Korea’s money market via systemized reporting and disclosure schemes, improved transparency in benchmark interest rates. 

With the Financial Services Commission, Korea Capital Market Institute will host a policy seminar on the enactment of the proposed money market bill. The seminar will not only share the legislative intent and highlights of the bill, but also seek ways to formulate a regulatory framework that enhances market stability and transparency.