This research was presented by the Ministry of Finance in June of 1993. It includes plans by each sector to open the financial market.
For 30 years after the first five-year economic development plan was launched in 1962, our country’s financial industry made a sizable contribution to the rapid growth of our economy by mobilizing and distributing insufficient funds. However, with the increasing size of our economy and foreign trade, it became necessary to liberalize and open the financial market in order to minimize trade conflicts.
For this reason, the government pushed to privatize banks and liberalize interest rates, foreign currencies and capital. A detailed proposal was prepared that outlined the three-level financial liberalization and market opening plans. The three-level plans include key assignments including interest rate liberalization, loan management system, short-term financial market development and liberalization of foreign exchanged and capital. The detailed proposals reflect the results of a study carried out by the financial industry development council.
The fundamental direction is that in the process of our country’s development into a new economy, is it necessary to change the role of financial sectors, prepare UR negotiations and become a member of OECD.
In principle, it aims to complete most of the liberalization and opening process by 1997. It will be enacted in three phases: the first level (in 1993), the second level (1994-1995) and the third level (1996-1997).
For plans by each sector, the detailed proposals are included and divided into the liberalization of interest rates, the enhancement of currency management methods, the reformation of the loan management system, the development of the short-term financial market, the liberalization of foreign exchange and capital transactions and so forth.
For the liberalization of interest rates, the essential is to increase the actual empowerment of the interest rates of the bank debenture and the monetary stabilizing bonds (expected to take place in the third level) and the interest rate of the government and public bonds (expected to be in the fourth level), under the four-level plan announced in August of 1991.
For the currency management method, the government proposes to implement an open-market operation such as gradually introducing the total limit system of re-discounting and reducing the issuance of currency bonds and, at the same time, introducing the reserve funds for capital by reducing the bank reserve ratio.
To reform the loan management system, the government plans to remove unnecessary regulations by dividing large and medium-to-small corporations and easing the standards for the compulsory loan for medium-to-small corporations.
For the development of the short-term financial market, the government agreed to activate the blind brokerage system and organize the market to introduce the auction system for the monetary stabilizing bonds and government and public bonds during the first level. During the second level, the government proposes to develop short-term financial products such as varying maturity dates for CP, and for the third level it proposes to introduce financial products that are linked to market rates, which include MMC and MMF.
Above this, it implemented various systems that include expanding daily currency fluctuation to liberalize foreign exchange and capital transactions.
제3단계 금융자율화 및 시장개발 계획(안)(The three-level financial liberalization and market opening plans (proposal))
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||재무부; 한국개발연구원 국제정책대학원|