The Ministry of Health and Welfare is pushing for the National Pension Service to issue foreign-currency bonds. It is being reviewed as one of the measures to stabilize the won-dollar exchange rate.
According to the Ministry of Health and Welfare on the 9th, the ministry is conducting a research project on the necessity and validity of the National Pension Service issuing foreign-currency bonds.
The government believes the current high exchange rate partly stems from the National Pension Service's large-scale overseas investments. It says the structure in which the National Pension Service converts large amounts of won into dollars in the spot market to invest abroad is pushing up the exchange rate. The idea is that if some investment funds are raised overseas by issuing foreign-currency bonds, it can reduce dollar-buying demand in the domestic foreign exchange market and ease exchange rate volatility.
After the research project, the ministry is also reviewing a plan to push for an amendment to the National Pension Act. The current National Pension Act stipulates that funds needed for pension operations are to be formed from four sources: ▲ pension insurance premiums ▲ fund operation revenue ▲ reserves ▲ surplus from the settlement of account of the corporation's income and expenditure. Because it is impossible under current law to raise funds by issuing overseas bonds, a legal amendment is necessary.
A ministry official said, "The Ministry of Economy and Finance also agrees with the plan to amend the National Pension Act," adding, "We are also reviewing a lawmaker-initiated bill (for swift handling)."
Detailed matters such as the size and timing of the foreign-currency bond issuance are expected to be discussed by a four-party consultative body of the Ministry of Economy and Finance, the Ministry of Health and Welfare, the Bank of Korea, and the National Pension Service, formed to respond to exchange rate moves.
Meanwhile, the four-party consultative body is discussing various foreign exchange market stabilization measures, including extending the foreign exchange swap contract between the foreign exchange authorities and the National Pension Service, which is set to expire at the end of this year, to respond to exchange rates.
Minister Jung Eun-kyeong of the Ministry of Health and Welfare recently said at a press briefing, "It is true that the National Pension Service's impact on the domestic economy and the foreign exchange market has grown, but while a pension fund can affect exchange rates, pension funds are also greatly affected by exchange rates," adding, "Because (the National Pension Service and exchange rates) inevitably influence each other, it is time to consider how to manage the pension in line with the new economic environment."