Financial Authorities and All Financial Sectors Actively Cooperate in Establishing the Chaean Fund and Other COVID-19 Financial Support Agreements

[Asia Economy Reporter Kim Hyo-jin] The financial sector has agreed to actively cooperate in establishing bond and securities market stabilization funds to respond to financial market instability caused by the novel coronavirus disease (COVID-19).

On the afternoon of the 25th, Eun Sung-soo, Chairman of the Financial Services Commission, met with heads of financial sector associations at the Bankers' Hall in Jung-gu, Seoul, and signed a "Financial Support Agreement to Overcome the COVID-19 Crisis" reflecting this commitment.

Attending the signing ceremony were Chairman Eun, Yoon Seok-heon, Governor of the Financial Supervisory Service; Kim Tae-young, Chairman of the Korea Federation of Banks; Na Jae-cheol, Chairman of the Korea Financial Investment Association; Shin Yong-gil, Chairman of the Life Insurance Association; Kim Yong-duk, Chairman of the General Insurance Association; Kim Joo-hyun, Chairman of the Credit Finance Association; Park Jae-sik, Chairman of the Korea Federation of Savings Banks; Hwang Gil-hyun, Head of the National Credit Union Federation of Korea; Ahn Ho-geun, Executive Director of the National Agricultural Cooperative Federation; and Park Young-beom, Director of the National Credit Union Federation.

The Financial Services Commission explained that the attendees agreed that just as all citizens united to support the financial sector during the past foreign exchange crisis, this time all financial sectors must pool their capabilities to support citizens affected by COVID-19.

Prime Minister Chung Sye-kyun also attended the meeting that day. Prime Minister Chung said, "In this emergency economic situation, the financial sector must support the smooth operation of the real economy," adding, "Financial sector assistance is urgently needed to prevent corporate bankruptcies despite profits and to stop small business owners and self-employed individuals from closing their doors."

Below are the contents of the agreement.

◆ Banks will strive to supply ultra-low interest rate (1.5%) funds to small and medium-sized enterprises (SMEs) and small business owners as efficiently as possible.

◆ Banks will provide information on suitable financial products to SMEs and small business owners through branches and other channels.

◆ Banks will actively cooperate with and faithfully perform entrusted tasks related to the Regional Credit Guarantee Foundations, whose operations have been delayed due to recent surges in demand.

◆ Guarantee institutions will closely cooperate with banks regarding guarantee screening and non-face-to-face processing to ensure SMEs and small business owners receive necessary funds as quickly as possible.

◆ The financial sector will actively work to ensure that loan maturity extensions and interest repayment deferrals can be smoothly implemented starting April 1.

◆ The financial sector will refrain from loan recovery to maintain liquidity support effects for companies experiencing temporary cash flow difficulties (including affiliated large companies, large corporations, and mid-sized companies) and will participate in providing new funds if necessary.

◆ The financial sector will contribute to the establishment of the Bond Market Stabilization Fund and actively cooperate in increasing the fund size if needed.

◆ The financial sector will actively cooperate in the prompt establishment of the Securities Market Stabilization Fund to stabilize the stock market.

◆ Financial authorities clearly confirmed that they will not penalize minor errors in related tasks, including the above measures, and will actively support efforts by the financial sector to enhance capital soundness.