'Unprotected Deposits' 1,454 Trillion Won... 'Deposit Protection Limit' Stagnant for 24 Years

Unprotected Deposits Account for 49.7% of Total Deposits
Deposit Protection Limit Remains at 50 Million Won for 24 Years Since 2001
Assemblyman Yudongsu: "Concerns Over Potential Losses in Emergencies... Need to Discuss Raising the Limit"

It has been revealed that 49.7%, nearly half of the 2,924 trillion KRW in deposits within the financial sector, are so-called 'unprotected deposits,' raising concerns about potential harm to financial consumers in emergencies.

According to data received on the 24th from the Deposit Insurance Corporation by National Assembly member Yoodongsoo of the Political Affairs Committee, as of March this year, the amount of deposits exceeding 50 million KRW and thus 'unprotected' in banks, savings banks, insurance, and financial investment sectors reached 1,454.3 trillion KRW.

The deposit protection limit refers to the maximum amount of 50 million KRW that the Deposit Insurance Corporation pays on behalf of a financial institution when it is unable to return deposits to depositors due to business suspension or bankruptcy. The 50 million KRW deposit protection limit has been in effect since 2001 and has been maintained for 24 years.

Unprotected deposits exceeding 50 million KRW have been steadily increasing. The amount of unprotected deposits, which was 691.8 trillion KRW in 2014, surged by 762.5 trillion KRW over ten years, and this year alone, it increased by 55.2 trillion KRW in just three months compared to the end of last year.

By year, unprotected deposits were recorded as ▲1,188.3 trillion KRW in 2020 ▲1,318.8 trillion KRW in 2021 ▲1,381 trillion KRW in 2022 ▲1,399.1 trillion KRW in 2023 ▲1,454.3 trillion KRW as of March 2024. Their proportion has also gradually increased, maintaining around 48-49% of the total financial sector deposits from 2020 to this year.

Member Yoodongsoo stated, "Major countries such as the United States, the United Kingdom, and Japan raised their deposit protection limits after the 2008 global financial crisis," and added, "It is necessary to discuss adjusting the deposit protection limit, which has remained unchanged for 24 years."

He continued, "The financial industry is concerned that raising the deposit protection limit would increase the insurance premiums paid annually to the Deposit Insurance Corporation and that the benefits of a higher limit might only go to a few, along with risks such as money movement in savings banks. If the issue is the fairness of risk burden by sector, a differentiated approach could be considered, such as raising the protection limit for banks while maintaining the limits for savings banks and mutual finance institutions, taking into account fund movements from banks," he added.