Bank of Korea Surprised by Martial Law Declares "Purchasing RP to Supply Market Liquidity" (Update)

Bank of Korea Holds Emergency Monetary Policy Meeting to Discuss Expanding Liquidity Supply
Plans to Supply Liquidity by Purchasing RP Until Market Stabilizes

As the shock to our financial market intensified due to the president's midnight declaration of emergency martial law, the Bank of Korea held an emergency Monetary Policy Committee meeting and announced that it would supply ample liquidity until the market stabilizes.

On the morning of the 4th, the Bank of Korea's Monetary Policy Committee held an extraordinary meeting at the Bank of Korea headquarters and announced that it would begin non-regular repurchase agreement (RP) purchases from that day and expand short-term liquidity supply to the market.

The Bank of Korea explained that it would conduct full allotment RP purchases if necessary and carry out simple purchases of government bonds and sufficient repurchases of Monetary Stabilization Bonds related to the bond market.

To ensure smooth liquidity supply, the scope of securities and institutions eligible for RP transactions will also be expanded. In addition to the current securities for open market operations, industrial finance bonds, small and medium enterprise finance bonds, export-import finance bonds, special bonds issued by nine public institutions, agricultural finance bonds, fisheries finance bonds, and financial bonds under the Banking Act will be added. The institutions eligible for repurchase agreement transactions will also be expanded to include all domestic banks and foreign bank branches.

Furthermore, the Bank of Korea emphasized that it will supply foreign currency liquidity through foreign currency RPs and actively implement various stabilization measures in case of sharp exchange rate fluctuations.

The Bank of Korea stated that these measures will be implemented temporarily until February 28 of next year.