[Financial Policy 2025] Over '100 Trillion+α' Invested in Financial Stability... 'Annual 700 Billion Won' Financial Support for Self-Employed

Financial Services Commission and Economic Ministries Joint Work Report
'Financial Instability' Amid Martial Law Aftermath... 24-Hour Monitoring System Maintained at F4 Meeting Center
Introduction of 'Financial Stability Account' within Reserve Fund for Proactive Support of Normal Financial Companies
Expansion of Financial Support for Self-Employed and Vulnerable Groups
Reduction of Burden from Card Fees and Early Repayment Fees
Complete Eradication of Illegal Private Loans... Enforcement of Revised Loan Business Act in July

The Financial Services Commission (FSC) will activate the 'Comprehensive Financial Market Stability System' to stably manage the financial market amid growing uncertainty due to prolonged political instability following the emergency martial law situation. Centered around the Macroeconomic and Financial Issues Meeting (F4 Meeting), a 24-hour monitoring system will be maintained, and a 'Financial Stability Account' will be introduced within the Deposit Insurance Fund to provide proactive support to sound financial companies facing difficulties.

Additionally, financial support will be expanded for self-employed individuals and vulnerable groups struggling due to prolonged high interest rates and sluggish domestic demand, and phased responses to completely eradicate illegal private loans will be strengthened.

Yonhap News

On the 8th, the FSC announced detailed plans for market stabilization and livelihood recovery at a joint economic ministry briefing under the theme of 'Economic Risk Management and Economic Vitality Enhancement.' The FSC plans to maintain a 24-hour inspection and response system through the F4 Meeting and closely manage risk factors such as high exchange rates and capital movements. In particular, a market stabilization program worth 100 trillion won will continue to operate, with readiness to quickly add and expand it as needed.

The FSC will introduce a 'Financial Stability Account' within the Deposit Insurance Fund to proactively support 'sound financial companies' struggling due to rapid market fluctuations and will also promote the advancement of resolution systems for swift responses to financial company insolvencies. The 'Financial Stability Account,' previously used to resolve insolvent financial companies, will be expanded to support sound financial companies facing liquidity and capital expansion difficulties.

Improvements to the deposit insurance system will also be pursued, including raising the deposit protection limit from 50 million won to 100 million won. The amendment to the Deposit Insurance Act passed the National Assembly plenary session on December 27 last year. The amendment will be promulgated in January and implemented within one year thereafter. Along with this, the evaluation grades will be subdivided from five to seven levels, and a differentiated deposit insurance premium system reflecting the characteristics of each sector will be improved.

An FSC official explained, "A debt repayment plan related to the special account for savings banks in the Deposit Insurance Fund, which ends at the end of next year, will be prepared by June this year to enhance the fund's soundness," adding, "To strengthen the stability of financial transactions, the activation of KOFR, a risk-free benchmark interest rate, will also be pursued."

Financial Support of Approximately 700 Billion Won Annually for Self-Employed... Relief on Card Fees and Early Repayment Fees

Debt burdens will be eased for the self-employed, and policy finance supply will be expanded for vulnerable groups. From March to July this year, the FSC and banking sector will provide comprehensive support through four major financial support measures: tailored debt adjustment, low-interest and installment repayment for closed businesses, win-win guarantees and loans, and bank consulting. This comprehensive support plan, worth approximately 600 to 700 billion won annually, is estimated to benefit about 250,000 people per year. For borrowers at risk of delinquency, long-term installment repayment and interest reductions will be supported, and for closed businesses, refinancing loans will be provided to allow repayment of remaining loans over up to 30 years (at an interest rate of about 3%) after business closure.

For delinquent self-employed individuals, the Restart Fund (worth 40 trillion won) will be strengthened to support recovery. Following the expansion of support targets to business operators in November last year, the FSC plans to review measures to reorganize requirements such as debt limits and business types to eliminate blind spots. For diligent repayers of the Restart Fund, additional support such as living and recovery funds will be provided, and debt adjustment information will be immediately lifted upon employment or re-startup after completing education. This month (January), the FSC will activate financial companies' own debt adjustment through the Personal Debtor Protection Act and introduce a debt exemption system for small vulnerable debtors. Eligible individuals include basic livelihood security recipients or persons with severe disabilities with delinquency periods over one year or debts under 5 million won.

Furthermore, the FSC will implement measures to reduce card fees for the self-employed in February and improve the disclosure system for simple payment fees to further ease fee burdens. This month, early repayment fees reflecting actual costs will be applied to promote refinancing by financial consumers and reduce costs associated with early repayment. For early repayment fees, mortgage loans will be adjusted from the current 1.2?1.4% to 0.6?0.7%, and unsecured loans from 0.6?0.8% to within 0.4%, expecting an annual reduction effect of about 150 billion won.

An FSC official stated, "We will mandate electronic payment gateway (PG) companies to separately manage settlement funds to protect the sales proceeds of self-employed individuals," adding, "To ensure the effects of base rate cuts are felt, we will continuously monitor movements in loan and funding rates and improve the rationality of interest rate operation methods."

The FSC plans to expand the total supply of policy microfinance from about 10 trillion won annually to about 11 trillion won and increase loan limits by product. From January, the Worker’s Sunshine Loan will increase from 15 million won to 20 million won, the Sunshine Loan 15 from 14 million won to 20 million won, and the Sunshine Loan Bank from 20 million won to 25 million won. Additionally, the Youth Leap Account’s yield will be raised from the current 8.9% to a maximum of 9.5%, and incentives for maintaining subscriptions will be expanded. For example, maintaining a subscription for more than two years will grant credit score points and partial withdrawal service support.

Complete Eradication of Illegal Private Loans... On-Site, Close-Knit 'Financial Consumer Protection'

The FSC will actively promote damage prevention and response guidelines in line with the implementation of the amended Loan Business Act in July, strengthen cooperation with investigative agencies regarding ultra-high interest rates and illegal debt collection, and activate litigation support and representation for victim relief. The amendment focuses on invalidating antisocial loan contracts, strengthening penalties for illegal private loans, and tightening loan business registration requirements.

Moreover, to establish consumer protection practices, the FSC will prepare an on-site, close-knit financial consumer protection system and introduce an 'Account Opening Safe Blocking Service' to prevent voice phishing damage. A preemptive suspension system for accounts suspected of involvement in livelihood-damaging crimes such as gambling and drug money will be introduced, and a cooperative system with related agencies will be established for the legalization of the payment suspension system.

An FSC official explained, "We will establish 'consumer protection principles' that can operate at sales sites and improve regulations such as abolishing the exclusive contract obligation for loan solicitors with one company and mandating disclosure for loan solicitation corporations," adding, "We will protect citizens' assets from livelihood-damaging crimes, voice phishing, and mistaken remittances."