Need to Expand Deposit Protection Limit... Financial Authorities Should Accelerate Efforts

The current limit in our country is 50 million won
It has been fixed for over 20 years since 2001

The People Power Party has requested the financial authorities to expand the deposit insurance coverage limit.

Seong Il-jong, the Policy Committee Chair of the People Power Party, stated at the party’s floor strategy meeting held at the National Assembly on the morning of the 21st, "It is necessary to set a deposit insurance coverage limit appropriate for South Korea as it advances into an economic powerhouse."

Seong Il-jong, Chairman of the Policy Committee of the People Power Party (Photo by Yonhap News)

Seong continued, "Following the recent collapse of Silicon Valley Bank (SVB), the 16th largest bank in the United States, the U.S. government decided to guarantee all deposits regardless of the coverage limit," emphasizing, "Such an incident strongly suggests that it is time to reconsider South Korea’s deposit insurance coverage limit."

The deposit insurance system ensures that the Deposit Insurance Corporation pays depositors in the event of a financial institution’s bankruptcy. Currently, South Korea’s coverage limit is set at 50 million won. Seong explained, "This limit has remained unchanged for over 20 years since it was raised from the previous 20 million won in 2001. It is necessary to expand the coverage limit to keep pace with the times and prepare for financial crises," adding, "In particular, South Korea’s per capita Gross Domestic Product (GDP) has more than doubled from $15,736 in 2001 to $32,661 in 2022 due to continuous economic growth over the past 20 years."

He further pointed out, "Looking at the deposit insurance coverage limits of major advanced countries, the U.S. is about 330 million won, the European Union about 140 million won, and Japan about 100 million won, showing a significant difference compared to South Korea’s coverage limit," and noted, "Even considering differences in per capita GDP and economic levels among countries, South Korea’s coverage limit is noticeably low."

Seong also stated, "The government has an obligation to minimize the public’s anxiety when using financial services. Only then can our citizens, who own 1,152.7 trillion won beyond the current coverage limit, trust the government and continue their economic activities," urging, "I hope the responsible institutions, including the Deposit Insurance Corporation and financial authorities, will expedite the release of concrete improvement plans."