This document discusses the current status of interest rate policy, as well as the necessity of, and execution directions for, the liberalization of interest rates.
Presently, the Korean government’s interest rate regulation continues to support the investment required for fast growth under an environment of chronic funding overhead. In the 1980s, partial liberalization of interest rates was attempted; however, it was only limited to nominal liberalization of individual financial products without tangible outcome. Nevertheless, it laid the groundwork for more active measures towards the liberalization of interest rates.
The liberalization of interest rate policy is necessary: first to enhance economy management effects that could include policy changes (such as high growth), for low market prices and favorable balance in international trade, to reduce factors that cause interest rate decline, to relieve chronic governmental financial deficiencies, to improve financial circulation, to improve financial conditions for corporations, and to increase individual income and financial assets through stabilization of market price. Moreover, the liberalization of interest rate policy is pivotal to the development of the banking industry, and will help to globalize the fund market through the opening of foreign currency and fund markets.
The liberalization of interest rates should be implemented in steps. However, the broadest measures should be put into operation in the earliest stages. The liberalization of loan interest rates should be implemented first, for both banks and non-bank enterprises. Additionally, expert feedback should be collected and analyzed to develop comprehensive supplementary measures.
Measures should be implemented quickly to facilitate capital flow and efficiently promote of fund distribution.
금리자유화추진방향(Directions of liberalization of interest rates)
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|