The International Finance Policy Advisory Committee, a private advisory body directly under the Deputy Prime Minister composed of experts in international finance and foreign exchange policy, was launched on the 1st.
Koo Yun-cheol, Deputy Prime Minister and Minister of the Ministry of Economy and Finance, presided over the first meeting of the International Finance Policy Advisory Committee at Conference House Dalgaebi in Jung-gu, Seoul, on the same day and said, "The existing order of international finance is being shaken by changes in the global trade environment, fragmentation of the world economy, and the routinization of geopolitical risks," adding, "The government's special response and close communication with experts are important."
Deputy Prime Minister Koo said, "In recent years, Korea's net external financial assets have been increasing rapidly, reaching about $1.1 trillion," adding, "This is meaningful in that we have secured a solid external safety net that can fully respond to demands for external debt repayment in the event of a crisis."
However, "behind this lies the problem that funds for corporations to use are not being sufficiently supplied in our capital market," adding, "Such an imbalance in capital flows can constrain corporations' investment capacity and their ability to secure growth capital, burdening the vitality of Korea's real economy."
Deputy Prime Minister Koo said, "To fundamentally resolve these issues, the keys are realizing an ultra-innovation economy, boosting ultra-factor productivity through structural reform, and advancing the capital and foreign exchange markets." He added, "We will build an offshore won settlement infrastructure so that foreign financial institutions can operate won overseas and prepare a comprehensive Morgan Stanley Capital International (MSCI) roadmap within the year."
He also said, "To create synergy with the government's efforts to advance the capital and foreign exchange markets, we intend to focus policy on expanding financial companies' inbound (inflow) sales to increase the inflow of foreign investment funds into the domestic market and on creating an environment to support this." While gathering opinions from financial companies, the plan is interpreted as aiming to increase foreign investors' domestic investment by raising market accessibility through inclusion in the World Government Bond Index (WGBI) and MSCI.
At the meeting, advisory members said, "Recently, the foreign exchange market has been heavily influenced by structural supply-demand factors, such as a psychological herding phenomenon and an increase in residents' overseas investment," diagnosing, "It is not a crisis situation, as key external soundness indicators, including Korea's credit default swap (CDS) premium, are favorable."
Some attendees noted that "it is an urgent task to establish a monitoring system under the Foreign Exchange Transactions Act to ensure the soundness of cross-border digital asset transactions, such as stablecoins, and to block illegal and bypass transactions (loopholes)."
Meanwhile, the International Finance Policy Advisory Committee will, in principle, be held twice a year going forward. If necessary, it plans to share trends and outlooks on major international finance issues through small-scale meetings, including international and financial market conditions and U.S. tariff negotiations.